The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this PHIP, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this PHIP.

Post Hearing Information Pack of

福萊特玻璃集團股份有限公司 FLAT GLASS GROUP CO., LTD.

(the “Company”)

(A joint stock company incorporated in the People’s Republic of China with limited liability)

WARNING

The publication of this PHIP is required by The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”)/ the Securities and Futures Commission (the “ Commission ”) solely for the purpose of providing information to the public in Hong Kong.

This PHIP is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with the Company, its sponsor, advisers or member of the underwriting syndicate that:

(a) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document;
(b) the publication of this document or supplemental, revised or replacement pages on the Stock Exchange’s website does not give rise to any obligation of the Company, its sponsor, advisers or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with the offering;
(c) the contents of this document or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;
(d) the PHIP is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on The Stock Stock Exchange of Hong Kong Limited;
(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;
(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended;
(g) neither the Company nor any of its affiliates, advisers or underwriters is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this document;
(h) no application for the securities mentioned in this document should be made by any person nor would such application be accepted;
(i) the Company has not and will not register the securities referred to in this document under the United States Securities Act of 1933, as amended, or any state securities laws of the United States;
(j) as there may be legal restrictions on the distribution of this document or dissemination of any information contained in this document, you agree to inform yourself about and observe any such restrictions applicable to you; and
(k) the application to which this document relates has not been approved for listing and the Stock Exchange and the Commission may accept, return or reject the application for the subject public offering and/ or listing.

No offer or invitation will be made to the public in Hong Kong until a prospectus of the Company has been registered with the Register of Companies in Hong Kong in accordance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on the Company’s prospectus registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period.

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

IMPORTANT

If you are in any doubt about any of the contents of this document, you should seek independent professional advice.

==> picture [86 x 60] intentionally omitted <==

福萊特玻璃集團股份有限公司 Flat Glass Group Co., Ltd.

(A joint stock company incorporated in the People’s Republic of China with limited liability)

[REDACTED]

Number of [REDACTED] : [REDACTED] H Shares (subject to the [REDACTED]) Number of [REDACTED] : [REDACTED] H Shares (subject to adjustment and the [REDACTED]) Number of [REDACTED] : [REDACTED] H Shares (subject to adjustment) [REDACTED] : Not more than HK$[REDACTED] per [REDACTED] and expected to be not less than HK$[REDACTED] per [REDACTED], plus brokerage of 1.0%, an SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005% (payable in full on application in Hong Kong dollars and subject to refund) Nominal value : RMB0.25 per H Share Stock code : [REDACTED] Sole Sponsor and [REDACTED]

[REDACTED]

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. A copy of this document, having attached thereto the documents specified in the section headed “Documents Delivered to the Registrar of Companies and Available for Inspection” in Appendix VIII to this document, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this document or any other documents referred to above. Our Company is established, and substantially all of our businesses are located, in the PRC. Potential investors in our Company should be aware of the differences in the legal, economic and financial systems between the mainland of the PRC and Hong Kong and that there are different risk factors relating to investment in PRC-incorporated businesses. Potential investors should also be aware that the regulatory framework in the PRC is different from the regulatory framework in Hong Kong and should take into consideration the different market nature of the shares of our Company. Such differences and risk factors are set out in the sections headed “Risk Factors” and in “Appendix V — Summary of Principal Legal and Regulatory Provisions” and “Appendix VI — Summary of Articles of Association” in this document. Potential investors should consider carefully all the information set out in this document and, in particular, the matters discussed in the above-mentioned sections. The [REDACTED] is expected to be determined by agreement between the [REDACTED] (for themselves and on behalf of the Underwriters) and our Company on the [REDACTED]. The [REDACTED] is expected to be on [REDACTED] or such later date as may be agreed between the [REDACTED] and our Company, but in any event not later than [REDACTED]. The [REDACTED] will not be more than HK$[REDACTED] per [REDACTED] and is currently expected to be not less than HK$[REDACTED] per [REDACTED] unless otherwise announced. Investors applying for [REDACTED] must pay, on application, the maximum [REDACTED] of HK$[REDACTED] for each [REDACTED] together with a brokerage of 1.0%, an SFC transaction levy of 0.0027% and a Stock Exchange trading fee of 0.005%, subject to refund if the [REDACTED] is lower than HK$[REDACTED]. The [REDACTED] (for themselves and on behalf of the Underwriters), may, with consent of our Company, reduce the indicative [REDACTED] range stated in this document and/or the number of [REDACTED] being offered at any time on or prior to the morning of the last day for lodging applications under the [REDACTED]. In such a case, a notice of the reduction of the indicative [REDACTED] range will be published in South China Morning Post (in English) and the Hong Kong Economic Times (in Chinese) not later than the morning of the last day for lodging applications under the [REDACTED]. Such notice will also be available at the website of the Stock“How Exchangeto Apply forat www.hkexnews.hk the [REDACTED]”andin thisour websitedocument.at www.flatgroup.com.cn . Further details are set out in the sections headed “Structure of the [REDACTED]” and If, for any reason, the [REDACTED] is not agreed between the [REDACTED] (for themselves and on behalf of the Underwriters) and our Company on or before [REDACTED], the [REDACTED] will not become unconditional and will lapse immediately.

Prospective investors of the [REDACTED] should note the obligations of the Hong Kong Underwriters under the [REDACTED] Agreement to subscribe, and to procure subscribers to subscribe for, the [REDACTED], are subject to termination by the [REDACTED] (for themselves and on behalf of the Underwriters) if certain events shall occur prior to 8:00 am (Hong Kong time) on the [REDACTED]. Further details of the terms of such provisions are set out in the section headed “Underwriting” in this document. The [REDACTED] have not been and will not be registered under the U.S. Securities Act and may not be offered or sold, pledged or transferred within the United States or to, or for the account or benefit of, U.S. persons, except in transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act. The [REDACTED] are being offered and sold outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act.

[REDACTED]

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

EXPECTED TIMETABLE[(1)]

[REDACTED]

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EXPECTED TIMETABLE[(1)]

[REDACTED]

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

CONTENTS
		Page
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	i
CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	iii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	20
GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	33
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	35
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	37
WAIVERS FROM COMPLIANCE WITH THE LISTING RULES . . . . . . . . . . . . . . . . .		64
INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] . . . . . . . . . . . . .		67
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN	THE [REDACTED] . . .	71
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	76
INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	78
APPLICABLE LAWS AND REGULATIONS . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	97
HISTORY AND CORPORATE STRUCTURE . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	114
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	128
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS	. . . . . . . . . . . . . . . . . . . .	207
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT	. . . . . . . . . . . . . . . . . . .	214
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	229
SUBSTANTIAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	233
CORNERSTONE INVESTOR . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	235
FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	238
FUTURE PLANS AND USE OF PROCEEDS . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	308
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	310
STRUCTURE OF THE [REDACTED] . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	321
HOW TO APPLY FOR THE [REDACTED] . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	330

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			CONTENTS
				Page
APPENDIX	I	—	ACCOUNTANTS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX	II	—	UNAUDITED PRO FORMA FINANCIAL INFORMATION . . . .	II-1
APPENDIX	III	—	SUMMARY OF THE INDEPENDENT TECHNICAL REPORT . .	III-1
APPENDIX	IV	—	TAXATION AND FOREIGN EXCHANGE . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX	V	—	SUMMARY OF PRINCIPAL LEGAL AND REGULATORY
			PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
APPENDIX	VI	—	SUMMARY OF ARTICLES OF ASSOCIATION . . . . . . . . . . . . .	VI-1
APPENDIX	VII	—	STATUTORY AND GENERAL INFORMATION . . . . . . . . . . . . .	VII-1
APPENDIX	VIII	—	DOCUMENTS DELIVERED TO THE REGISTRAR OF
			COMPANIES AND AVAILABLE FOR INSPECTION . . . . . . . .	VIII-1

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SUMMARY

This summary aims to give you an overview of the information contained in this document. Since it is a summary, it does not contain all the information that may be important to you. You should read this document in its entirety before you decide to invest in the [REDACTED]. There are risks associated with any investment. Some of the particular risks in investing in the [REDACTED] are set out in the section headed “Risk Factors” in this document. You should read that section carefully before you decide to invest in the [REDACTED].

OVERVIEW

We were the largest manufacturer of photovoltaic glass (commonly known as PV glass, which is defined in the section headed “Glossary of Technical Terms” in this document) globally and in China, in terms of sales revenue of PV raw glass and processed PV glass in 2014, according to the Frost & Sullivan Report. Our sales revenue from PV glass in 2014 accounted for approximately 18.9% of the total global sales revenue of PV glass and approximately 26.3% of the total sales revenue of PV glass in China. Our PV glass products are mainly ultra-clear patterned PV glass, which is primarily used to manufacture c-Si PV cells that can subsequently be assembled to form c-Si PV modules. Our PV glass can also be used as covers for thin film PV cells. We sell our PV glass products primarily to domestic and overseas PV module manufacturers. According to the Frost & Sullivan Report, most of the global top ten PV module manufacturers in 2014 have purchased our PV glass products. While we derive a majority of our revenue from PV glass, we also manufacture and sell float glass, household glass and architectural glass, which, together with the PV glass, comprise our four major glass products.

According to the Frost & Sullivan Report, the market size of the PV glass industry grew steadily in the last five years, where the global sales revenue generated from ultra-clear patterned PV glass increased from approximately RMB5,742.5 million in 2010 to approximately RMB7,916.5 million in 2014, representing a CAGR of 8.4%. Our revenue for the years ended December 31, 2012, 2013 and 2014, was RMB1,488.6 million, RMB2,187.3 million and RMB2,833.3 million, respectively, representing a CAGR of 38.0%, and for the five months ended May 31, 2014 and 2015, was RMB1,149.8 million and RMB1,237.4 million, respectively. Our revenue from the PV glass segment for the years ended December 31, 2012, 2013 and 2014, was RMB1,120.5 million, RMB1,438.4 million and RMB2,078.4 million, respectively, representing a CAGR of 36.2%, and for the five months ended May 31, 2014 and 2015, was RMB845.0 million and RMB937.2 million, respectively. Our profit after tax for the years ended December 31, 2012, 2013 and 2014, was RMB59.9 million, RMB203.6 million and RMB392.7 million, respectively, representing a CAGR of 156.1%, and for the five months ended May 31, 2014 and 2015, was RMB162.1 million and RMB161.5 million, respectively.

According to the Frost & Sullivan Report, we were one of the largest PV raw glass manufacturers in China in 2014. As of December 31, 2014, we owned and operated seven furnaces for raw glass production, five of which were used for manufacturing ultra-clear PV raw glass and had an aggregate daily maximum production capacity of 2,290 tons, which ranked second in China in 2014, according to the Frost & Sullivan Report, and the remaining two furnaces were used for manufacturing float glass with an aggregate daily maximum production capacity of 1,200 tons. As of the Latest Practicable Date, our aggregate daily maximum production capacity for PV raw glass and float glass remained at 2,290 tons and 1,200 tons, respectively.

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SUMMARY

Our production base is strategically located in Jiaxing, Zhejiang Province, which is part of the Yangtze River Delta region. We believe our future success is closely linked to the economic development of the region, where many of our existing and potential PV glass customers are located due to favorable government policies that encourage the development and application of new and clean alternative energy. We have built a strong customer base in China and overseas that includes leading PV module manufacturers, such as Solar Frontier K.K., a wholly owned subsidiary of Showa Shell Sekiyu K.K., and we have supplied PV glass products to a renowned Japanese multinational corporation. We have also established stable long-term relationship with a large multinational furniture retailer that designs and sells ready-to-assemble furniture, appliances and home accessories. This reflects the general acceptance and recognition of the high quality of our glass products by our reputable international customers.

We are recognized as a leader in the PV glass industry in China as we were the first PV glass manufacturer in the PRC to obtain the SPF certifications for PV glass from the Institut Fu¨r Solartechnik in Switzerland for having passed the Solartechnik Prüfung Forschung (SPF) testing procedures tailored for PV glasses. In addition, we have participated in setting industry standards of PV glass manufacturing. Our PV glass products have also been recognized in China for its superb quality, which were used in several iconic structures, including in the PV projects of the China Pavilion and other theme pavilions of the 2010 Shanghai World Expo and the National Stadium in Beijing, also known as the Bird’s Nest. In addition, in recognition of our leading position and expertise in PV glass manufacturing, we received numerous awards in China, including, among others, the National Key New Product Award awarded by, among others, Ministry of Science and Technology of the PRC (中華人民共和國科學技術部) in 2008. We also possess industry-leading technologies and strong research and development capabilities that we believe are instrumental to our success. For instance, we have developed a coating agent in-house for our PV glass to enhance its light transmission rate. Based on laboratory testing carried out by an independent testing center, our 3.2mm coated PV glass has a light transmission rate of up to 94.5% as compared to 91.8% before the application of the coating agent. We have included the composition and the production method of this coating agent among one of our patents, “A reflection-reducing and high transmission rate ultra-clear patterned PV glass and its production method”* (一種減反射高透過率鍍膜太陽能超白壓花玻璃及其製造方法).

OUR COMPETITIVE STRENGTHS

We believe that the following are our principal competitive strengths: (i) we were the largest PV glass manufacturer globally and in China and one of the most experienced manufacturers in China with advantageous geographic location; (ii) we have vertically integrated business operations, which enable us to better control our production cost and to maximize our return; (iii) we have a stable and strong customer base as we provide high quality products; (iv) we have a product mix that is adaptable to market fluctuations; (v) we possess industry-leading technologies and strong research and development capabilities; and (vi) we have an experienced and stable management team with extensive industry knowledge.

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SUMMARY

OUR BUSINESS STRATEGIES

We aim to strengthen our market position as a leading PV glass manufacturer and to increase our market share by pursuing the following strategies: (i) increase our production efficiency in order to continue to maintain our leading position in the global and domestic PV glass industry; (ii) expand overseas to increase the production and processing capacity of our PV glass and enhance our competitiveness; (iii) continue to optimize our product mix; (iv) further strengthen our research and development capabilities; (v) expand our geographical coverage in China by expanding our production capabilities domestically; and (vi) capitalizing on our existing distributed PV system operating experience to expand the capacity of our distributed PV systems.

OUR BUSINESS MODEL

We are principally engaged in the design, development, production and sales of PV glass, which is sold to PV module manufacturers in China and overseas. In addition to PV glass, we also manufacture and sell float glass, household glass and architectural glass. To maintain a cost-efficient operating structure, we have adopted a vertically integrated business model that gives us more control over our production. Our vertical integration commences from the production of raw glasses (comprising PV raw glass and float glass), which are subsequently processed into PV glass, household glass and architectural glass products, as the case may be. During the Track Record Period, all of our PV glass products were processed from the PV raw glass we manufactured in-house, and approximately 90% of our household glass and architectural glass products were processed from the float glass we manufactured in-house. We have obtained the mining rights to the Mine in Anhui Province to mine quartzite ore, which can be processed into silica sand, one of the major raw materials we use for our float glass production. See “Business — Our Business Model” on page 138 of this document for details.

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SUMMARY

OUR PRODUCTS

We generated most of our revenue from the sale of PV glass during the Track Record Period. We also manufacture and sell float glass, household glass and architectural glass. The following table sets forth the revenue breakdown and gross profit/(loss) margin by product type during the Track Record Period:

					For the year	ended December	ended December	ended December	31,						For the	For the	five months ended May	five months ended May	five months ended May	31,
Product type		2012				2013					2014				2014				2015
				Gross				Gross					Gross				Gross				Gross
				profit				profit					profit				profit				profit
	Revenue			margin	Revenue			margin		Revenue			margin	Revenue			margin	Revenue			margin
	RMB’000		%	%	RMB’000		%	%	RMB’000			%	%	RMB’000		%	%	RMB’000		%	%
														(unaudited)
PV glass . . .	1,120,450		75.3	25.8	1,438,413		65.8	27.6	2,078,373			73.3	37.0	845,016		73.5	36.4	937,227		75.7	33.1
Float glass . .	170,616		11.5	(1.5)	425,298		19.4	26.0		353,846		12.5	19.6	159,089		13.8	22.7	126,978		10.3	3.6
Household
glass . . .	182,218		12.2	17.1	222,578		10.2	24.4		250,875		8.9	24.9	105,499		9.2	23.9	96,579		7.8	20.9
Architectural
glass . . .	15,273		1.0	22.7	100,770		4.6	33.1		139,197		4.9	24.3	39,868		3.5	25.3	57,147		4.6	12.8
Others(l) . . .	—		—	—	224		—	(30.8)		11,015		0.4	(54.8)	322		—	43.5	19,501		1.6	36.9
Total . . . .	1,488,557	100.0		21.6	2,187,283	100.0		27.2	2,833,306		100.0		32.8	1,149,794	100.0		33.0	1,237,432	100.0		28.2

Note:

(1) Others mainly include the quartzite ore extracted from the Mine, which was sold to third parties since 2013.

The increase in our overall gross profit margin during the Track Record Period was mainly attributable to an increase of our production efficiency and our improved ability to control cost. Our gross profit margin increased from 21.6% for the year ended December 31, 2012 to 32.8% for the year ended December 31, 2014, primarily due to the increase in gross profit margin of PV glass from 25.8% for the year ended December 31, 2012 to 37.0% for the year ended December 31, 2014, mainly as a result of a decrease in the cost of energy as a proportion of our cost production and an increase in the average selling price. Our gross profit margin decreased from 33.0% for the five months ended May 31, 2014 to 28.2% for the five months ended May 31, 2015 primarily due to the increase of the energy cost associated with our production as we used a higher proportion of natural gas in connection with our production as a result of our focusing more on environmentally friendly production process.

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SUMMARY

The following table sets forth the number of units sold and the average selling price of our various glass products during the years or periods indicated:

For the	year ended December 31, 2013 2014 Units(1) Average selling price(1) Units(1) Average selling price(1) ’000 RMB ’000 RMB 51,160 28.12 69,535 29.89 341 1,247.23 312 1,135.39 5,941 37.47 6,719 37.34 1,738 57.98 2,692 51.71	year ended December 31, 2013 2014 Units(1) Average selling price(1) Units(1) Average selling price(1) ’000 RMB ’000 RMB 51,160 28.12 69,535 29.89 341 1,247.23 312 1,135.39 5,941 37.47 6,719 37.34 1,738 57.98 2,692 51.71	For the five months ended May 31,	For the five months ended May 31,	For the five months ended May 31,
2012 Units(1) Average selling price(1) ’000 RMB 35,356 31.69 160 1,066.94 5,010 36.37 225 67.89	2013 Units(1) Average selling price(1) ’000 RMB 51,160 28.12 341 1,247.23 5,941 37.47 1,738 57.98		2014 Units(1) Average selling price(1) ’000 RMB 27,866 30.33 130 1,221.97 2,766 38.14 849 46.94	2015
Units(1) ’000 35,356 160 5,010 225	Units(1) ’000 51,160 341 5,941 1,738	Units(1) ’000 69,535 312 6,719 2,692	Units(1) ’000 27,866 130 2,766 849	Units(1) ’000 32,006 122 2,758 1,017	Average selling price(1)
					RMB 29.28 1,042.21 35.02 56.21

Note:

(1) The units for float glass are in tons while the units for PV glass, household glass and architectural glass are in sq.m. All information relating to the units sold and average selling prices was based on our internal records. Accordingly, the data and information derived from those figures in the table above and disclosed elsewhere in this document were based on our internal records.

See also “Business — Our Products” on page 140 of this document for further details.

OUR PRODUCTION FACILITIES AND PROCESSES

Our production facilities are strategically located in Jiaxing, Zhejiang Province, the PRC, in the Yangtze River Delta. As of the Latest Practicable Date, we operated 16 production lines for the production of PV raw glass, 21 dedicated processing lines for PV glass, two production lines for float glass, 12 processing lines for household glass and 12 processing lines for architectural glass (including tempering, laminating, insulating and Low-E coating). Our PV glass is processed from the PV raw glass we manufacture in-house while our household glass and architectural glass are primarily processed from the float glass we manufacture in-house.

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SUMMARY

The following table sets forth the designed production capacity and actual production volume and utilization rates for our PV raw glass during the Track Record Period:

PV raw glass Designed production capacity(2) (tons) . . . . . . . . . . . . . . . . . . . . . . . Actual production volume (tons) . . . . Utilization rate (5) (%) . . . . . . . . . . . .	For the year ended December 31, 2012(1) 2013(1) 2014(1) 479,040 570,650(3) 835,850(4) 364,739 447,976 662,247 76.1 78.5 79.2	For the year ended December 31, 2012(1) 2013(1) 2014(1) 479,040 570,650(3) 835,850(4) 364,739 447,976 662,247 76.1 78.5 79.2	For the five months ended May 31,
	2012(1) 479,040 364,739 76.1	2013(1) 570,650(3) 447,976 78.5	2015(1)
			345,790 261,816 75.7

Notes:

(1) The data and information set out in the table were based on our internal records.
(2) Designed production capacity is calculated by multiplying the designed daily production capacity by actual production days for the year or period.
(3) Our designed production capacity increased from 2012 to 2013 primarily due to (i) one of our large PV glass furnaces with a daily maximum production capacity of 600 tons commenced operations in May 2013; and (ii) two of our PV glass furnaces with daily maximum production capacity of 300 tons each that were temporarily shut down in the second half of 2012 to undergo technical upgrades, resumed operations in the fourth quarter of 2013.
(4) Our designed production capacity increased in 2014 compared to 2013 primarily due to an increase in the number of days in which our PV glass furnaces operated.
(5) Utilization rate is calculated by dividing the actual production volume for the year or period by the designed production capacity for the year or period.

The following table sets forth the designed processing capacity and actual processing volume and utilization rates for our PV glass during the Track Record Period:

PV glass Designed processing capacity(2)(3) (sq.m.) . . . . . . . . . . . . . . . . . . . . . . Actual processing volume(3) (sq.m.) . . Utilization rate(6) (%). . . . . . . . . . . . .	For the year ended December 31, 2012(1) 2013(1) 2014(1) 63,679,820 78,604,820(4) 93,852,820(5) 33,470,406 44,305,215 74,402,247 52.6 56.4 79.3	For the year ended December 31, 2012(1) 2013(1) 2014(1) 63,679,820 78,604,820(4) 93,852,820(5) 33,470,406 44,305,215 74,402,247 52.6 56.4 79.3	For the five months ended May 31,
	2012(1) 63,679,820 33,470,406 52.6	2013(1) 78,604,820(4) 44,305,215 56.4	2015(1)
			39,511,868 32,105,189 81.3

Notes:

(1) The data and information set out in the table were based on our internal records.
(2) Designed processing capacity is calculated by multiplying the designed daily processing capacity by actual days of operations for the year or period.
(3) The designed processing capacity and the actual processing volume are calculated based on the capacity and processing volume of dedicated PV glass processing lines, respectively.

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SUMMARY

(4) Our designed processing capacity increased from 2012 to 2013 as four new dedicated processing lines commenced operations in 2013.
(5) Our designed processing capacity increased from 2013 to 2014 as a new dedicated processing line commenced operations in 2014.
(6) Utilization rate is calculated by dividing the actual processing volume for the year or period by the designed processing capacity for the year or period.

The following table sets forth the designed production capacity, and actual production volume and utilization rates for our float glass during the Track Record Period:

Float glass Designed production capacity(2) (tons) . . . . . . . . . . . . . . . . . . . . . . . Actual production volume (tons) . . . . Utilization rate(4) (%). . . . . . . . . . . . .	For the year ended December 31, 2012(1) 2013(1) 2014(1) 234,600 438,000(3) 438,000 221,944 435,657 432,631 94.6 99.5 98.8	For the year ended December 31, 2012(1) 2013(1) 2014(1) 234,600 438,000(3) 438,000 221,944 435,657 432,631 94.6 99.5 98.8	For the five months ended May 31,
	2012(1) 234,600 221,944 94.6	2013(1) 438,000(3) 435,657 99.5	2015(1)
			181,200 173,284 95.6

Notes:

(1) The data and information set out in the table were based on our internal records.
(2) Designed production capacity is calculated by multiplying the designed daily production capacity by actual production days for the year or period.
(3) Our designed production capacity increased in 2013 compared to 2012 primarily because we commenced operations of our second float glass furnance with a daily maximum production capacity of 600 tons in December 2012.
(4) Utilization rate is calculated by dividing the actual production volume for the year or period by the designed production capacity for the year or period.

See “Business — Our Production Facilities and Processes” on page 145 of this document for further details.

SUPPLIERS AND RAW MATERIALS PROCUREMENT

We procure a majority of our raw materials from third-party suppliers that are based in the PRC, and a small quantity of raw materials from certain overseas suppliers, including those in the United States. Our raw materials mainly include silica sand and soda ash. Furthermore, fuel and electricity are also major components in our cost of sales. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, the purchases from our five largest suppliers amounted to RMB524.2 million, RMB398.3 million, RMB589.0 million and RMB259.1 million, respectively, representing 44.9%, 25.0%, 30.9% and 29.2%, respectively, of our cost of sales, and purchases from our largest supplier amounted to RMB233.6 million, RMB175.4 million, RMB254.4 million and RMB109.3 million, respectively, representing 20.0%, 11.0%, 13.4% and 12.3%, respectively, of our cost of sales during the same period.

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SUMMARY

Our five largest suppliers during the Track Record Period comprised mainly suppliers of chemicals, fuel and silica sand. We have one to five years of relationship with our five largest suppliers during the Track Record Period. See “Business — Suppliers and Raw Materials Procurement” on page 156 of this document for details.

OUR CUSTOMERS, SALES AND MARKETING

We primarily sell our glass products to customers in the PRC, Japan, Singapore, Korea, Taiwan, Germany and the United States. The following table sets forth our total revenue by geographical location during the Track Record Period:

Location	For the	For the	year ended December 31,	year ended December 31,	year ended December 31,	For the five	months ended May 31,	months ended May 31,	months ended May 31,
	2012		2013		2014	2014			2015

Note:

(1) Include, among others, Korea, Singapore and Taiwan, and exclude the PRC and Japan.

For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, sales to our five largest customers amounted to RMB412.2 million, RMB546.8 million, RMB831.1 million and RMB425.6 million, respectively, representing 27.7%, 25.0%, 29.3% and 34.4%, respectively, of our total revenue, and sales to our largest customer amounted to RMB130.3 million, RMB190.3 million, RMB222.8 million and RMB179.3 million, respectively, representing 8.8%, 8.7%, 7.9% and 14.5%, respectively, of our total revenue. During the Track Record Period, we had three to eight years of relationship with our five largest customers. See “Business — Our Customers” on page 160 of this document for details.

During the Track Record Period and up to the Latest Practicable Date, our PV glass, household glass and architectural glass products were marketed and sold in the PRC and overseas, whereas a substantial majority of our float glass products were marketed and sold in the PRC.

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SUMMARY

RESEARCH AND DEVELOPMENT

We established a strong research and development department comprising over 200 staff, of which over 30 were research specialists as of May 31, 2015, a majority of whom possess university degrees or above. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we have invested RMB59.9 million, RMB66.6 million, RMB129.3 million and RMB44.4 million into research and development, respectively. We have successfully developed technologies that improve the performance of our products. As of the Latest Practicable Date, we owned a total of 36 patents in the PRC, of which, 34 were utility model patents and two were invention patents. See “Business — Research and Development” on page 172 of this document for details.

MINING RIGHTS

Silica sand is one of our major raw materials for the production of our PV raw glass and float glass. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, the cost of silica sand amounted to 7.7%, 10.3%, 10.8% and 11.1% of our total cost of production, respectively. In order to secure a stable supply of quality silica sand, our wholly-owned subsidiary, Anhui Flat Materials entered into a mining rights agreement with Chuzhou City Bureau of Land Resources (滁州市國土資源局) dated April 13, 2011, pursuant to which Anhui Flat Materials obtained the extraction right to the seventh segment of a quartzite mine located at the Lingshan-Mujishan mining zone in Fengyang County, Chuzhou City, Anhui Province, the PRC (中國安徽省滁州市鳳陽縣) for a consideration of RMB226.6 million. See “Business — Mining Rights” on page 176 of this document for details. An Independent Technical Report was prepared by the Competent Persons on the Mine. See “Business — The Independent Technical Report” and “Summary of the Independent Technical Report” in Appendix III to this document for details.

SHAREHOLDER INFORMATION

Immediately following the completion of the [REDACTED] and without taking into account of any H Shares which may be allotted and issued pursuant to the exercise of the [REDACTED], Mr. Ruan Hongliang and Ms. Jiang Jinhua will own approximately [REDACTED]% and [REDACTED]% interest in our Company, respectively. Ms. Jiang Jinhua is the spouse of Mr. Ruan Hongliang. Therefore, Mr. Ruan Hongliang and Ms. Jiang Jinhua together will be entitled to exercise approximately [REDACTED]% of the voting rights at the general meetings of our Company, and each of Mr. Ruan Hongliang and Ms. Jiang Jinhua will be regarded as our Controlling Shareholder under the Listing Rules immediately following the Listing. See also “Relationship with Controlling Shareholders” on page 207 of this document for more information.

Furthermore, the pre-IPO investor of our Company, Mr. Zhao Xiaofei, the spouse of Ms. Ruan Zeyun, and the son-in-law of Mr. Ruan Hongliang and Ms. Jiang Jinhua, will own approximately [REDACTED]% interest in our Company immediately following the completion of the [REDACTED] and without taking into account of any H Shares which may be allotted and issued pursuant to the exercise of the [REDACTED]. See also “History and Corporate Structure — Our Company — 4. Acquisition of Equity Interest by Mr. Zhao Xiaofei” for more information.

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SUMMARY

SUMMARY OF HISTORICAL FINANCIAL INFORMATION

The following tables set out our summary consolidated financial information as of and for the years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015. We have derived this summary from our consolidated financial statements set forth in the Accountants’ Report in Appendix I to this document. The following table also presents our summary consolidated income statement data for the five months ended May 31, 2014, which we have derived from our unaudited consolidated financial statements set forth in the Accountants’ Report in Appendix I to this document. Our results for the five months ended May 31, 2015 are not necessarily indicative of results that may be expected for the year ending December 31, 2015 or for any other future period. You should read this summary together with the consolidated financial information as set forth in the Accountants’ Report in Appendix I to this document, including the related notes, as well as the information set forth in “Financial Information” beginning on page 238 of this document. Our consolidated financial information has been prepared in accordance with IFRS.

Summary of Consolidated Statements of Profit or Loss and Other Comprehensive Income

The following table sets forth selected items of our consolidated statements of profit or loss and other comprehensive income for the years or periods indicated:

Revenue. . . . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . Other gains and losses . . . . . . . Selling and marketing expenses . Administration expenses. . . . . . . Research and development expenditure . . . . . . . . . . . . . . . Finance costs . . . . . . . . . . . . . . . Profit before tax. . . . . . . . . . . . Income tax expense . . . . . . . . . . Profit and total comprehensive income for the year/period . .	Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,488,557 2,187,283 2,833,306 (1,167,434) (1,592,422) (1,904,972) 321,123 594,861 928,334 20,339 15,256 20,479 (27,963) (11,134) (38,522) (57,921) (102,246) (108,845) (75,320) (93,769) (105,458) (59,894) (66,582) (129,333) (56,958) (72,343) (80,251) 63,406 264,043 486,404 (3,523) (60,428) (93,737) 59,883 203,615 392,667	Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,488,557 2,187,283 2,833,306 (1,167,434) (1,592,422) (1,904,972) 321,123 594,861 928,334 20,339 15,256 20,479 (27,963) (11,134) (38,522) (57,921) (102,246) (108,845) (75,320) (93,769) (105,458) (59,894) (66,582) (129,333) (56,958) (72,343) (80,251) 63,406 264,043 486,404 (3,523) (60,428) (93,737) 59,883 203,615 392,667	Five months ended May 31,	Five months ended May 31,
	2012 RMB’000 1,488,557 (1,167,434) 321,123 20,339 (27,963) (57,921) (75,320) (59,894) (56,958) 63,406 (3,523) 59,883	2013 RMB’000 2,187,283 (1,592,422) 594,861 15,256 (11,134) (102,246) (93,769) (66,582) (72,343) 264,043 (60,428) 203,615	2014 RMB’000 (unaudited) 1,149,794 (770,543) 379,251 6,495 (22,360) (45,312) (43,472) (37,085) (35,856) 201,661 (39,583) 162,078	2015
				RMB’000 1,237,432 (888,314) 349,118 14,282 (4,569) (46,588) (43,849) (44,377) (28,566) 195,451 (33,912) 161,539

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SUMMARY

Summary of Consolidated Statements of Financial Position

The following table sets forth our summary consolidated statements of financial position as of the dates indicated:

Non-current assets . . . . . . . . . . . . . . . Current assets . . . . . . . . . . . . . . . . . . Current liabilities . . . . . . . . . . . . . . . Net current (liabilities)/assets . . . . . . Total assets less current liabilities . . . Net assets . . . . . . . . . . . . . . . . . . . . .		As	of December	of December	31, 2014 RMB’000 2,272,220 1,831,980 2,089,462 (257,482) 2,014,738 1,657,534		As of May 31,
		2012 RMB’000 2,296,356 1,347,865 1,479,673 (131,808) 2,164,548 1,536,062		2013 RMB’000 2,289,444 1,663,108 1,650,601 12,507 2,301,951 1,739,677			2015
							RMB’000 2,225,268 1,772,276 1,887,849 (115,573) 2,109,695 1,819,073

As of December 31, 2012 and 2014 and May 31, 2015, we had net current liabilities of RMB131.8 million, RMB257.5 million and RMB115.6 million, respectively. We had net current liabilities as of December 31, 2012 primarily due to (i) a decrease in our revenue from our PV glass segment as compared to the previous year due to the downturn of the PV glass market in 2012, which in turn caused the decrease in our trade and bills receivables; and (ii) the funding of our capital expenditures through our short-term loans primarily for the constructions of our second 600-ton float glass furnace and our first 600-ton PV glass furnace. In addition, we had net current liabilities as of December 31, 2014 mainly due to the exit of investment by our Financial Investors, namely, Primemont Capital, Boxin Preferred, Guoyuan Investment and Boxin Growth. We had net current liabilities as of May 31, 2015 primarily due to (i) the funding of our capital expenditures through our short-term loans primarily for our new flue-gas denitration facilities, which came into operation in May 2015; and (ii) the reclassification of the second tranche of consideration payment plus interest as current liabilities on the outstanding balance at the prevailing lending rate of PBOC due in April 2016 in the amount of RMB87.9 million for the acquisition of the mining rights of the Mine. See “Risk Factors — Risks Relating to Our Business and Our Industry — We had net current liabilities as of December 31, 2012 and 2014 and May 31, 2015 and a significant level of indebtedness during the Track Record Period. We may be exposed to liquidity risks, and our business, financial conditions and results of operations may be materially and adversely affected as a result” on page 40 and “Financial Information — Description of Selected Consolidated Statements of Financial Position Items — Current Assets and Liabilities” on page 283 of this document for more information.

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SUMMARY

Summary of Consolidated Statements of Cash Flows

The following table sets forth our cash flows for the years or periods indicated:

Net cash (used in)/from operating activities . . . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . . . Net cash from/(used in) financing activities . . . . . . . . . Net (decrease)/increase in cash and cash equivalents . . . . . . . . Cash and cash equivalents at the beginning of year/period . . . . . Cash and cash equivalents at the end of year/period. . . . . .	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the five months ended May 31,	For the five months ended May 31,
		2012 RMB’000 (9,338) (289,113) 241,582 (56,869) 182,112 125,243		2013		2014 RMB’000 (unaudited) 127,329 (29,042) 191,112 (92,825) 214,174 121,349	2015
				RMB’000 553,737 (235,970) (228,836) 88,931 125,243 214,174			RMB’000 170,742 (83,448) (37,046) 50,248 141,220 191,468

Financial Ratios

The following table sets forth a summary of our key financial ratios during the Track Record Period:

Net profit margin(1) . . . . . . Return on assets(2) . . . . . . . Return on equity(3) . . . . . . Current ratio(4) . . . . . . . . . Quick ratio(5). . . . . . . . . . . Debt to equity ratios(6) . . . Gearing ratio(7) . . . . . . . . . Interest coverage ratio(8) . .	As of/for the year ended December 31, 2012 2013 2014 4.0% 9.3% 13.9% 1.6% 5.2% 9.6% 3.9% 11.7% 23.7% 91.1% 100.8% 87.7% 73.7% 88.6% 72.9% 67.7% 45.4% 45.8% 75.9% 57.7% 54.3% 2.11 4.65 7.06	As of/for the year ended December 31, 2012 2013 2014 4.0% 9.3% 13.9% 1.6% 5.2% 9.6% 3.9% 11.7% 23.7% 91.1% 100.8% 87.7% 73.7% 88.6% 72.9% 67.7% 45.4% 45.8% 75.9% 57.7% 54.3% 2.11 4.65 7.06	As of/for the five months ended May 31,
	2012 4.0% 1.6% 3.9% 91.1% 73.7% 67.7% 75.9% 2.11	2013 9.3% 5.2% 11.7% 100.8% 88.6% 45.4% 57.7% 4.65	2015
			13.1% 4.0% 8.9% 93.9% 82.0% 44.4% 54.9% 7.84

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SUMMARY

Notes:
(1)	Net profit margin equals our net profit after tax divided by revenue for the year or period multiplied by 100%.
(2)	Return on assets equals net profit for the year or period divided by total assets as of the end of the year or period
	multiplied by 100%. Return on assets for the five months ended May 31, 2015 was not annualized.
(3)	Return on equity equals net profit for the year or period divided by total equity amounts as of the end of the year
	or period multiplied by 100%. Return on equity for the five months ended May 31, 2015 was not annualized.
(4)	Current ratio equals our current assets divided by current liabilities as of the end of the year or period multiplied
	by 100%.
(5)	Quick ratio equals our current asset less inventories divided by current liabilities as of the end of the year or period
	multiplied by 100%.
(6)	Debt to equity ratio equals total borrowings net of bank balances and cash at the end of the year or period divided
	by total equity at the end of the year or period multiplied by 100%.
(7)	Gearing ratio equals total debt divided by total equity as of the end of the year or period multiplied by 100%. Total
	debt includes all interest-bearing bank and other loans.
(8)	Interest coverage ratio equals profit before interest (finance cost ) and tax of one year or period divided by interest
	(finance cost) of the same year or period.

Our return on assets ratio increased from 1.6% for the year ended December 31, 2012 to 5.2% for the year ended December 31, 2013 and further increased to 9.6% for the year ended December 31, 2014 and our return on equity increased from 3.9% for the year ended December 31, 2012 to 11.7% for the year ended December 31, 2013, and further increased to 23.7% for the year ended December 31, 2014. These increases were primarily due to a substantial increase in our net profit. Our return on assets ratio for the five months ended May 31, 2015 was 4.0%, and on an annualized basis was 9.6%, which was comparable to that for the year ended December 31, 2014. Our return on equity ratio for the five months ended May 31, 2015 was 8.9%, and on an annualized basis was 21.4%, which was slightly less than that for the year ended December 31, 2014, primarily due to a small decrease in our net profit (on an annualized basis) due to an increase in energy cost and an increase in our total equity. See “Financial Information — Financial Ratios — Analysis of Key Financial Ratios” on page 297 of this document for an analysis of the changes in the financial ratios.

RECENT DEVELOPMENT

From June 1, 2015 and up to the Latest Practicable Date, our business generally remained relatively stable. During the period, in order to increase our market penetration of our architectural glass products, we enhanced our price competitiveness such that average selling price for our architectural glass decreased by approximately 8.9% for the period from June 1, 2015 to the Latest Practicable Date as compared to the first five months ended May 31, 2015, based on our internal records. As a result, our sales of architectural glass increased. Further, during the period, the average selling price of our household glass increased by approximately 7.7% as compared to the average selling price for the five months ended May 31, 2015 and recovered to similar level for the year ended December 31, 2014, while the average selling price for our PV glass and float glass remained relatively stable as compared to the five months ended May 31, 2015, based on our internal records. To the best of our knowledge, there is no change to the overall economic and market condition in China or in the PV glass industry in which we operate that may have a material adverse effect to our business operations and financial position. On the other hand, as of the Latest Practicable Date, we

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SUMMARY

were in the course of upgrading our Low-E processing facilities to improve our Low-E glass processing efficiency, among other upgrades. We expect such processing efficiency of Low-E glass to improve from an average of 52 seconds per glass to up to 35 seconds per glass upon completion of the technological upgrade.

In terms of our operations, the global natural gas prices experienced a dramatic decline since the second half of 2014, according to the Frost & Sullivan Report. In China, natural gas price is regulated by the NDRC. According to the Frost & Sullivan Report, the average price of natural gas in China has not been significantly affected by the fluctuations of the global natural gas price. Based on our internal records, we have not noticed any significant price adjustments for our procurement of natural gas. As a result, the recent global natural gas price fluctuations did not have a material impact on our financial performance.

In August 2015, the PBOC had announced rounds of devaluation of the Renminbi by lowering its daily mid-point from a high of US$1.00 to RMB6.1162 on August 10, 2015 to a low of US$1.00 to RMB6.4010 on August 13, 2015. Renminbi devalued against the US dollars in August 2015, as (i) majority of our raw materials are procured within the PRC and settled in Renminbi; (ii) majority of our expenses for our operations such as selling and administrative expenses are incurred in the PRC and settled in Renminbi; (iii) our expected capital expenditures incurred in the PRC will principally be settled in Renminbi; and (iv) for our planned overseas expansion, we expect to procure the machineries and equipment from the PRC, which will be settled in Renminbi, we have not experienced nor expect any material and adverse effect on our business, operations and financial results due to the devaluation of the Renminbi. Since then, the valuation of RMB had increased and the latest mid-point trading price announced by PBOC on November 6, 2015 was US$1.00 to RMB6.3459.

In August 2015, the European Commission adjusted the anti-dumping duty applicable to our customers who would be importing our PV glass products into the European Union from 29.3% to 71.4%. As a result, we expect our sales of PV glass products to the European Union will further decrease in the future. As our sales of PV glass products to Europe accounted for approximately 2.6% of our total revenue for the five months ended May 31, 2015 based on our internal records, we do not expect further decrease in our sales of PV glass products to the European Union will have a material and adverse impact on our business operations or financial results. The remaining sales to Europe (4.4% of our total sales based on our internal records) for the five months ended May 31, 2015 primarily comprised of our household glass products.

On September 9, 2015, we obtained additional banking facilities of RMB415.0 million from Bank of China, Jiaxing Branch, one of our principal lenders. On September 21, 2015, September 22, 2015 and October 26, 2015, we drew down RMB30.0 million, RMB30.0 million and RMB140.0 million, respectively, under this facility (collectively, the “BOC Loan”), to replenish our liquidity and enhance our working capital. The BOC Loan bore an interest rate of the two-year benchmark lending rate issued by the PBOC at the time of the draw-downs. The BOC Loan is repayable according to the following schedule: one-eighth of the BOC Loan is repayable by May 31, 2016, one-fourth is repayable by December 31, 2016, one-fourth is repayable by April 30, 2017 and the remaining three-eighth is repayable by August 31, 2017.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

On October 9, 2015, we entered into an agreement to acquire the land use rights for a parcel of land and the ownership for buildings erected on the land located on Xigang Road, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC, which we intend to use primarily for warehousing and storage. See “Business — Properties” on page 203 for details.

RISK FACTORS

Our Directors believe that there are certain risks involved in our operations, Many of these risks are beyond our control, A detailed discussion of the risk factors that we believe are particularly relevant to us is set out in the section headed “Risk Factors” beginning on page 37 in this document, Some of the major risks we face include: (i) the PV glass industry could be materially and adversely affected by the fluctuations in the demand and supply and prices of PV modules; (ii) we are subject to a wide variety of laws of regulations, any failure to comply with these laws or regulations or to control costs associated with their compliance could harm our business; (iii) our operating results are subject to various foreign trade regulation measures, including anti-dumping and anti-subsidy on imported PV glass products; and (iv) we are exposed to uncertainties in relation to the Mine.

INTERNATIONAL SANCTIONS ON OUR SALES TO RUSSIA, BELARUS AND TUNISIA

We have made sales of our glass products to certain customers in Russia, Belarus and Tunisia (the “Subject Sales”) during the Track Record Period and up to the Latest Practicable Date. For the three years ended December 31, 2012, 2013, and 2014 and for the five months ended May 31, 2015, based on our internal records, we sold float glass and household glass products to several customers in Russia, which accounted for approximately 0.2%, 0.1%, 0.03% and 0.02% of our total revenue, respectively. Since June 1, 2015 and up to the Latest Practicable Date, we had a sales transaction made to one of our household glass customers in Russia for approximately US$0.01 million. To the best knowledge, information and belief of our Directors, these Russian customers were engaged in glass processing business. For the year ended December 31, 2014, based on our internal records, we also sold household glass products to a customer in Belarus, representing approximately 0.004% of our total revenue. During the Track Record Period and up to the Latest Practicable Date, we had not made any other sales to Belarus. Furthermore, for the year ended December 31, 2014 and for the five months ended May 31, 2015, based on our internal records, we sold PV glass to a customer in Tunisia, representing approximately 0.005% and 0.03% of our total revenue, respectively. During the Track Record Period and up to the Latest Practicable Date, we had not made any other sales to Tunisia. To the best knowledge, information and belief of our Directors, our Belarusian customer was a manufacturer for a large multinational furniture retailer, and our Tunisian customer was a PV module manufacturer.

The United States and certain other jurisdictions, including the European Union, Australia and Canada, have imposed broad economic sanctions against certain countries, individuals and legal entities. These jurisdictions have sanctions against certain persons in, or prohibit the export of certain items to, Russia, Belarus and Tunisia. Based on the advice by our Australian, Canadian, EU and U.S. sanctions law legal advisors, we do not believe the Subject Sales and our future sales to our customers of the Subject Sales are likely to present material sanctions risks to our Shareholders or potential investors merely as a result of holding our Shares or of investing in our Company, or for the Stock Exchange and its affiliates as a result of the Listing or of providing services relating to the Listing.

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SUMMARY

However, there can be no assurances that the economic sanctions laws or regulations would not change in a way that could affect our business, exports or sales in these countries or other countries and could result in restrictions, penalties or fines. Please see “Risk Factors — Risks Relating to Our Business and Our Industry — Our business, financial condition and results of operations may be materially and adversely affected by the Australian, Canadian, EU and U.S. sanctions against Russia, Belarus and Tunisia.”

We undertake to the Stock Exchange that (i) we will not use the proceeds from the [REDACTED], as well as other funds raised through the Stock Exchange to finance or facilitate, directly or indirectly, any projects or businesses in Sanctioned Countries; (ii) we will not enter into sanctionable transactions that would expose ourselves, our Shareholders or potential investors, or the Stock Exchange and its affiliates, to risks of being sanctioned; and (iii) if we believe that the transactions we have entered into in the Sanctioned Countries, if any, will put us and our investors and Shareholders in the risks of being sanctioned, we will disclose on the Stock Exchange’s website, on our website, and in the annual or interim report of our efforts on monitoring our business exposure to sanctions risk, the status of future business, if any, in the Sanctioned Countries and its business intention relating to the Sanctioned Countries. If we were in breach of such undertaking to the Stock Exchange, we risk possible delisting of our H Shares from the Stock Exchange.

Since we intend to continue to sell our glass products to our customers of the Subject Sales in Russia, Belarus and Tunisia, in order to identify and monitor our exposure to risks associated with sanctions law relating to such sales, we will adopt, before the Listing, various enhanced internal control measures, including among others: (i) establishing a risk management committee consisting, among others, of Mr. Ruan Hongliang, the chairman of our Board, Ms. Jiang Jinhua, our executive Director, and Ms. Pan Yushuang, our independent non-executive Director, to monitor our exposure to sanctions law and to oversee our implementation of the related internal control policies; (ii) our credit and risk control department will assist our risk management committee in the day-to-day monitoring of our sanctions risks; (iii) reviewing and approving new customers from Russia, Belarus and Tunisia, and other Sanctioned Countries by our risk management committee prior to entering into agreements with such customers; (iv) maintaining a control list of Sanctioned Countries, persons and entities and review the information of our existing and potential customers against such list, and updating the list from time to time; (v) engaging qualified external legal counsel in sanctions matters by our risk management committee to evaluate sanctions-related risks as and when necessary and adhering to appropriate advice provided by such legal counsel; (vi) convening monthly meetings between our risk management committee and our credit and risk control department, and to the extent necessary, our sales, procurement, finance and/or internal audit departments, to access the latest sanctions-related risks; (vii) providing training relating to sanctions law to our Directors, senior management members and other relevant personnel; and (viii) monitoring our use of proceeds from the [REDACTED] and the performance of our undertaking to the Stock Exchange relating to sanctions matters by our risk management committee. For details on international sanctions on our sales to customers in Russia, Belarus and Tunisia, please refer to the section headed “Business — Regulatory Compliance and Legal Proceedings — International Sanctions on Our Sales to Russia, Belarus and Tunisia” in this document.

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SUMMARY

ANTI-DUMPING AND ANTI-SUBSIDY

There have been anti-dumping and anti-subsidy investigations initiated by the European Commission, the United States and Canada against Chinese PV products manufactures in recent years. In May 2014, the European Commission imposed definitive anti-dumping duty and countervailing duty on imports of Chinese-made PV glass. According to the anti-dumping and anti-subsidy measures imposed by the European Union, our customers are subject to an anti-dumping duty rate of 29.3% and a countervailing duty rate of 12.8% on our PV glass products that are imported into the European Union for five years. Since August 2015, the anti-dumping duty applicable to our customers who would be importing our PV glass products into the European Union has been increased to 71.4% following the conclusion of an absorption reinvestigation commenced in December 2014 by the European Commission.

In addition, in October 2012 and December 2014, and July 2015, the relevant U.S. and Canadian authorities have announced the imposition of anti-dumping and countervailing duties against certain PV modules, laminates and/or panels originated in or exported from the PRC, respectively. As we did not sell any PV modules, laminates and/or panels during the Track Record Period and up to the Latest Practicable Date, these anti-dumping and countervailing duties or tarrifs imposed by the U.S. and Canadian authorities had no direct impact on us or our products. To the best of our knowledge, the imposition of the such anti-dumping and countervailing duties by the United States and Canada impacted some of our PV glass customers. Please see “Risk Factors ─ Risks Relating to Our Business and Our Industry ─ Our operating results are subject to various foreign trade regulation measures, including anti-dumping and anti-subsidy imposed on imported PV glass products.”

Because such anti-dumping and anti-subsidy measures were imposed directly against some of our customers rather than against us, to the best of our knowledge, the imposition of these measures by the European Union, the United States and Canada did not cause any material impact on our Group’s financial performance and operations during the Track Record Period. Please refer to the section headed “Business ─ Regulatory Compliance and Legal Proceedings ─ Anti-dumping and Anti-subsidy Investigations” for further details.

USE OF PROCEEDS

Assuming an [REDACTED] of HK$[REDACTED] per [REDACTED], which is the mid-point of the indicative [REDACTED] range, and assuming that the [REDACTED] is not exercised, the net proceeds we will receive from the issue of the [REDACTED], after deducting underwriting commissions and fees (taking into no account of any discretionary fee) and estimated expenses payable by us is HK$[REDACTED] million, we intend to use the proceeds from the [REDACTED] for the purposes and in the amounts set forth below:

Approximately 46.0%, or HK$[REDACTED] million, is expected to be used to establish overseas PV glass production and processing facilities in Vietnam by the second quarter of 2017;
Approximately 17.2%, or HK$[REDACTED] million, is expected to be used to establish new Low-E and Low-E composite glass processing facilities by the end of 2016 with an annual processing capacity of approximately 5.8 million sq.m. in Jiaxing, Zhejiang Province, the PRC;

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SUMMARY

Approximately 9.7%, or HK$[REDACTED] million, is expected to be used for costs relating to research and development of new products and purchase of new equipment for the next three years;
Approximately 9.7%, or HK$[REDACTED] million, is expected to be used for working capital and other general corporate purposes;
Approximately 9.1%, or HK$[REDACTED] million, is expected to be used for modifying and upgrading an existing PV glass furnace with a daily maximum production capacity of 490 tons, which is expected to commence in the first quater of 2016; and
Approximately 8.3%, or HK$[REDACTED] million, is expected to be used for the construction of new 15MW distributed PV systems for self-use, the construction of which is expected to commence in the second half of 2015 and to be completed in the first half of 2016.

For details of our use of the net proceeds from the [REDACTED], please refer to the section headed “Future Plans and Use of Proceeds” in this document.

[REDACTED] STATISTICS

Market capitalization(1) . . . . . . . . . . . . . . . . Unaudited pro forma adjusted consolidated net tangible assets per Share(2) . . . . . . . . .	Based on [REDACTED] of HK$[REDACTED] HK$[REDACTED] million HK$[REDACTED]	Based on [REDACTED] of HK$[REDACTED]
		HK$[REDACTED] million HK$[REDACTED]

Notes:

(1) The market capitalization is calculated based on the assumption that (i) [REDACTED] H Shares are expected to be issued and outstanding following the [REDACTED]; (ii) assuming the [REDACTED] is not exercised; and (iii) [REDACTED] Domestic Shares are issued and outstanding upon completion of the [REDACTED].

(2) The unaudited pro forma adjusted consolidated net tangible assets per Share attributable to owners of our Company is arrived at after the adjustments referred to in “Unaudited Pro Forma Financial Information” as set out in Appendix II to this document and based on [REDACTED] Shares expected to be issued and outstanding following the completion of the one to four share split and the [REDACTED], assuming the [REDACTED] is not exercised. The unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to the owners of the Company per Share does not take into account of the proposed dividends of RMB250,000,000 declared on September 30, 2015. Had such dividends been taken into account, the unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners of our Company per Share will be further adjusted to RMB[REDACTED] (equivalent to HK$[REDACTED], based on the indicative [REDACTED] of HK$[REDACTED]), or RMB[REDACTED] (equivalent to HK$[REDACTED], based on the indicative [REDACTED] of HK$[REDACTED]).

DIVIDEND POLICY

The payment and the amount of any dividends, if paid, will depend on our results of operations, cash flows, financial condition, statutory and regulatory restrictions on the payment of dividends by us, future prospects and other factors that we may consider relevant. The declaration, payment and amount of dividends will be subject to our discretion.

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SUMMARY

Dividends may be paid only out of our distributable profits as permitted under the relevant laws. To the extent profits are distributed as dividends, such portion of profits will not be available to be reinvested in our operations. There can be no assurance that we will be able to declare or distribute any dividend in the amount set out in any plan of the Board or at all. The dividend distribution record in the past may not be used as a reference or basis to determine the level of dividends that may be declared or paid by us in the future.

NO MATERIAL ADVERSE CHANGE

Our Directors confirm that, up to the date of this document, there has been no material adverse change in our financial or trading position since May 31, 2015 and there is no event since May 31, 2015 which would materially affect the information shown in the Accountants’ Report.

LISTING EXPENSES

We expect to incur a total of RMB[REDACTED] million of listing expenses (assuming an [REDACTED] of HK$[REDACTED], being the mid-point of the indicative [REDACTED] range between HK$[REDACTED] and HK$[REDACTED], and assuming that the [REDACTED] is not exercised) until the completion of the [REDACTED], of which RMB[REDACTED] million is expected to be charged to our consolidated statements of profit or loss and comprehensive income for the year ending December 31, 2015 and RMB[REDACTED] million is directly attributable to the issue of H Shares to the public and to be capitalized. Listing expenses represent professional fees and other fees incurred in connection with the Listing and the [REDACTED], including underwriting commissions but excluding discretionary bonus. The listing expenses above are the best estimate as of the Latest Practicable Date and for reference only and the actual amount may differ from this estimate. We do not expect these listing expenses to have a material impact on our results of operations for the year ending December 31, 2015.

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DEFINITIONS

In this document, unless the context otherwise requires, the following expressions have the following meanings. “affiliate(s)” any other person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified person “Anhui Flat Glass” Anhui Flat Solar Glass Co., Ltd.* (安徽福萊特光伏玻璃有限公司), a limited liability company established under the laws of the PRC on January 18, 2011, which was wholly-owned by our Company as of the Latest Practicable Date

“Anhui Flat Materials” Anhui Flat Solar Materials Co., Ltd.* (安徽福萊特光伏材料有限公司), a limited liability company established under the laws of the PRC on January 19, 2011, which was whollyowned by our Company as of the Latest Practicable Date

[REDACTED]

“Articles” or “Articles of the articles of association of our Company adopted on May Association” 18, 2015, as amended by the resolutions of the Board dated October 16, 2015 pursuant to the authority given by our Shareholders at our Shareholders’ meeting held on May 18, 2015, which will come into effect on the Listing Date, a summary of which is set out in Appendix VI to this document
“ASEAN”

Association of Southeast Asian Nations

“associate(s)” has the meaning ascribed to it under the Listing Rules
“Board” or “Board of Directors” the board of Directors of our Company
“BOCI” BOCI Asia Limited, a licensed corporation under the SFO to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities as defined under the SFO

“Boxin Growth” Boxin Growth (Tianjin) Equity Investment Fund Partnership (Limited Partnership)* (博信成長（天津）股權投資基金合夥企業（有限合夥）), a limited partnership established under the laws of the PRC on July 30, 2010 and one of our Shareholders during the Track Record Period until May 30, 2014. As of May 30, 2014, the date on which Boxin Growth ceased to be our Shareholder, all of the 15 partners of Boxin Growth were Independent Third Parties of our Company

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	DEFINITIONS
“Boxin Preferred”	Boxin Preferred (Tianjin) Equity Investment Fund Partnership
	(Limited Partnership)* (博信優選（天津）股權投資基金合夥
	企業（有限合夥）), a limited partnership established under the
	laws of the PRC on December 16, 2010 and one of our
	Shareholders during the Track Record Period until May 30,
	2014. As of May 30, 2014, the date on which Boxin Preferred
	ceased to be our Shareholder, all of the 49 partners of Boxin
	Preferred were Independent Third Parties of our Company
“Business Day” or ”business day”	a day on which banks in Hong Kong are generally open for
	business to the public and which is not a Saturday, Sunday or
	public holiday in Hong Kong
“CAGR”	compound annual growth rate
“CCASS”	the Central Clearing and Settlement System established and
	operated by HKSCC
“CCASS Clearing Participant”	a person admitted to participate in CCASS as a direct clearing
	participant or general clearing participant
“CCASS Custodian Participant”	a person admitted to participate in CCASS as a custodian
	participant
“CCASS Investor Participant”	a person admitted to participate in CCASS as an investor
	participant who may be an individual or joint individuals or a
	corporation
“CCASS Participant”	a CCASS Clearing Participant, or a CCASS Custodian
	Participant or a CCASS Investor Participant
“Central China”	comprising Henan, Hubei and Hunan Provinces
“China” or “PRC”	the People’s Republic of China excluding for the purpose of
	this document, Hong Kong, the Macau Special Administrative
	Region and Taiwan

[REDACTED]

“close associate(s)”

has the meaning ascribed to it under the Listing Rules

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DEFINITIONS

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) as the same may be amended, supplemented or otherwise modified from time to time
“Companies (WUMP) Ordinance” the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) as the same may be amended, supplemented or otherwise modified from time to time
“Company” or “our Company” Flat Glass Group Co., Ltd.(福萊特玻璃集團股份有限公司, previously known as Zhejiang Flat Glass & Mirror Co., Ltd. (浙江福萊特玻璃鏡業股份有限公司) and Flat Solar Glass Group Co., Ltd. (福萊特光伏玻璃集團股份有限公司)), a joint stock limited liability company converted from its predecessor, Zhejiang Flat Glass & Mirror Ltd. (浙江福萊特玻璃鏡業有限公司, previously known as Jiaxing City Naibang Trading Co., Ltd.* (嘉興市耐邦經貿有限公司)), a limited liability company established under the laws of the PRC, on December 29, 2005 and, except the context otherwise requires, its predecessor
“Competent Persons” Andrew Vigar and Glenn Sheldon, both consultants employed by the Independent Technical Consultant and authors of the Independent Technical Report, each of them is an independent mining and geological consultant who is qualified as a competent person as defined under Rule 18.01 of the Listing Rules, and an Independent Third Party
“connected person(s)” has the meaning ascribed to it under the Listing Rules
“Controlling Shareholder(s)” has the meaning ascribed to it in the Listing Rules and unless the context requires otherwise, refers to the controlling shareholders of our Company, namely Mr. Ruan Hongliang and Ms. Jiang Jinhua
“CSRC” China Securities Regulatory Commission (中國證券監督管理委員會), a regulatory body responsible for the supervision and regulation of the PRC national securities markets
“Deed of Indemnity” a deed of indemnity dated October 16, 2015 entered into by our Controlling Shareholders, with and in favor of, our Company (for itself and as the trustee for each of its subsidiaries) in respect of, among other things, certain indemnities regarding taxation and estate duty

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	DEFINITIONS
“Deed of Non-competition”	a deed of non-competition undertaking dated October 16,
	2015 entered into by our Controlling Shareholders and Ms.
	Ruan Zeyun with, and in favor of, our Company, details of
	which are disclosed in the section headed “Relationship with
	Controlling Shareholders” in this document
“Director(s)”	the directors of our Company
“Domestic Share(s)”	ordinary share(s) in the share capital of our Company with a
	nominal value of RMB1.00 each, which are subscribed for
	and credited as paid in RMB, are not listed on or traded in any
	stock exchange, and each share will be sub-divided into four
	shares of RMB0.25 each immediately upon Listing
“Eastern China”	comprising Jiangsu, Zhejiang, Anhui, Fujian, Shandong and
	Jiangxi Provinces and Shanghai Municipality
“EU” or “European Union”	the European Union, a politico-economic union of 28 member
	states that are located primarily in Europe, including Austria,
	Belgium, Bulgaria, Croatia, Cyprus, Czech Republic,
	Denmark, Estonia, Finland, France, Germany, Greece,
	Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg,
	Malta, Netherlands, Poland, Portugal, Romania, Slovakia,
	Slovenia, Spain, Sweden and United Kingdom
“Financial Investors”	Primemont Capital, Boxin Preferred, Guoyuan Investment
	and Boxin Growth
“Flat HK”	Flat (Hong Kong) Co., Limited (福萊特（香港）有限公司), a
	limited company incorporated under the laws of HK on
	January 9, 2013 and a wholly-owned subsidiary of our
	Company
“Flat New Energy”	Jiaxing Flat New Energy Technology Co., Ltd.* (嘉興福萊特
	新能源科技有限公司), a limited liability company established
	under the laws of the PRC on March 11, 2014 and a
	wholly-owned subsidiary of our Company
“Founders”	15 individuals who founded our Company in 1998, namely,
	Mr. Ruan Hongliang (阮洪良先生), Mr. Chen Xinhua (陳新華
	先生), Mr. Zou Haiming (鄒海明先生), Ms. Wang Huifen (王
	惠芬女士), Mr. Zhu Quanming (祝全明先生), Ms. Luo
	Shuying (駱淑英女士), Mr. Xu Lingen (徐林根先生), Mr.
	Zheng Wenrong (鄭文榮先生), Mr. Wu Herong (吳和榮先生),
	Mr. Wu Jianping (伍建平先生), Mr. Shen Fuquan (沈福泉先
	生), Mr Chen Jian (陳堅先生), Mr. Wei Yezhong (魏葉忠先
	生), Mr. Zhang Yongming (張永明先生) and Mr. Lu Peihua
	(陸培華先生)

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	DEFINITIONS
“Frost & Sullivan”	Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., a
	global market research and consulting company, which is an
	Independent Third Party
“Frost & Sullivan Report”	an independent market research report dated [●], 2015,
	commissioned by our Company on the PV industry, the PV
	glass industry, the PV power station industry and the float
	glass industry prepared by Frost & Sullivan
“GDP”	gross domestic product
	[REDACTED]
“Group”, “our Group”, “we” or	our Company and its subsidiaries or, where the context so
“us”	requires in respect of the period before our Company became
	the holding company of our present subsidiaries, the entities
	which carried on the business of the present Group at the
	relevant time
“Guoyuan Investment”	Guoyuan Direct Equity Investment Co., Ltd.* (國元股權投資
	有限公司), a limited liability company established under the
	laws of the PRC on August 18, 2009 and was one of our
	Shareholders during the Track Record Period until May 30,
	2014. As of May 30, 2014, the date on which Guoyuan
	Investment ceased to be our Shareholder, it was
	wholly-owned by Guoyuan Securities Co., Ltd.* (國元證券股
	份有限公司), an Independent Third Party
“HK$”, “Hong Kong dollar(s)”,	Hong Kong dollars and cents respectively, the lawful currency
“HKD” or “cents”	for the time being of Hong Kong
“HK” or “Hong Kong”	the Hong Kong Special Administrative Region of the PRC
	[REDACTED]
“HKFRS(s)”	Hong Kong Financial Reporting Standard(s)
“HKSCC”	Hong Kong Securities Clearing Company Limited

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		DEFINITIONS
“HKSCC	Nominees”	HKSCC Nominees Limited, a wholly-owned subsidiary of
		HKSCC

[REDACTED]

“Hong Kong Underwriters” the underwriters listed in the section headed “Underwriting — Hong Kong Underwriters” in this document, being the underwriters of the [REDACTED] “[REDACTED] Agreement” the underwriting agreement dated [●] 2015 relating to the [REDACTED] entered into between, among others, our Company, the Hong Kong Underwriters and the [REDACTED], as further described in the section headed “Underwriting” in this document “H Share Registrar” [REDACTED] “H Share(s)” ordinary share(s) in the share capital of our Company with a nominal value of RMB0.25 each, which are to be [REDACTED] in Hong Kong dollars and for which [REDACTED] for listing and permission to deal on the Stock Exchange “IFRS” the International Financial Reporting Standard(s) “Independent Technical Mining Associates Limited, who prepared the Independent Consultant” Technical Report relating to the Mine and an Independent Third Party “Independent Technical Report” an independent technical report prepared by the Competent Persons dated [●], 2015

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	DEFINITIONS
“Independent Third Party(ies)”	an individual(s) or a company(ies) who or which is/are
	independent of and not connected with (within the meaning of
	the Listing Rules) any Directors, Supervisors, chief executive
	or substantial shareholders (within the meaning of the Listing
	Rules) of our Company, its subsidiaries or any of their
	respective associates
	[REDACTED]
“[REDACTED] Agreement”	the [REDACTED] agreement relating to the [REDACTED]
	and to be entered into between, among others, our Company,
	the International Underwriters and the [REDACTED] on or
	around the [REDACTED], as further described in the section
	headed “Underwriting” in this document
	[REDACTED]
“International Underwriters”	the group of international underwriters expected to enter into
	the [REDACTED] Agreement
	[REDACTED]
“JORC”	the Joint Ore Reserves Committee of the Australasian
	Institute of Mining and Metallurgy, Australian Institute of
	Geoscientists and Minerals Council of Australia
“JORC Code”	the Australasian Code for Reporting of Exploration Results,
	Mineral Resources and Ore Reserves (2012 edition) published
	by JORC (which has the meaning ascribed to it under Chapter
	18 of the Listing Rules) and used for reporting of resources
	and reserves
“Latest Practicable Date”	November 8, 2015, being the latest practicable date for the
	purpose of ascertaining certain information in this document
	prior to its publication
“Listing”	the listing of the H Shares on the Main Board of the Stock
	Exchange
“Listing Committee”	the listing committee of the Stock Exchange

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	DEFINITIONS
“Listing Date”	the date, expected to be on or about [REDACTED], on which
	our [REDACTED] are listed and from which dealings therein
	are permitted to take place on the Stock Exchange
“Listing Rules”	The Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited, as amended from time to
	time
“Main Board”	the stock exchange (excluding the option market) operated by
	the Stock Exchange which is independent from and operated
	in parallel with the Growth Enterprise Market of the Stock
	Exchange
“Mandatory Provisions”	the Mandatory Provisions for Articles of Association of
	Companies to be Listed Overseas* (《到境外上市公司章程必
	備條款》), for inclusion in the articles of association of
	companies incorporated in the PRC to be listed overseas,
	which were promulgated by the former Securities
	Commission of the State Council (國務院證券委員會), the
	predecessor of the CSRC, and the former State Commission
	for Restructuring and the Economics Systems (國家經濟體制
	改革委員會) on August 27, 1994, as amended and
	supplemented from time to time
“Mine”	the seventh segment of a quartzite mine located at the
	Lingshan-Mujishan mining zone (靈山-木屐山礦區) in
	Fengyang County, Chuzhou City, Anhui Province, the PRC
	(中國安徽省滁州市鳳陽縣) where Anhui Flat Materials has
	obtained mining rights of such mine pursuant to the Mining
	Rights Agreement
“Mining Permit”	the mining permit of the PRC issued by the Anhui Province
	Land and Resources Department of the PRC to Anhui Flat
	Materials for the Mine dated August 22, 2012. See “Business
	— Mining Rights” for details of the mining permit
“Mining Rights Agreement”	a mining rights agreement entered into between Anhui Flat
	Materials and Chuzhou City Bureau of Land Resources (滁州
	市國土資源局) dated April 13, 2011 in relation to acquiring
	the extraction right to the Mine with a designed life of 31
	years for a consideration of RMB226,600,000

“NDRC”

The National Development and Reform Commission of the PRC (中華人民共和國國家發展和改革委員會)

“NPC” or “National People’s the National People’s Congress of the PRC (中華人民共和國 Congress” 全國人民代表大會)

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DEFINITIONS

[REDACTED]

“PRC Company Law”

“PRC EIT Law”

“PRC Legal Advisors”

“PRC government” or “State”

“PRC Mineral Resources Law”

the Companies Law of the PRC (中華人民共和國公司法), as enacted by the Standing Committee of the Eighth National People’s Congress on December 29, 1993 and effective on July 1, 1994, and subsequently amended on December 25, 1999, August 28, 2004, October 27, 2005 and December 28, 2013, and effective on March 1, 2014, as amended, supplemented or otherwise modified from time to time

Law of the PRC on Enterprise Income Tax (中華人民共和國企業所得稅法) adopted by the National People’s Congress of the PRC on March 16, 2007 and become effective on January 1, 2008

Jiangsu Yongheng Partners, the PRC legal advisors of our Company as to PRC laws

the central government of the PRC, including all governmental sub-divisions (such as provincial, municipal and other regional or local government entities)

the Mineral Resources Law of the PRC (中華人民共和國礦產資源法), as adopted by the Standing Committee of the Sixth National People’s Congress on March 19, 1986 and effective on October 1, 1986, as amended, supplemented or otherwise modified from time to time

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DEFINITIONS “PRC Securities Law” the Securities Law of the PRC (中華人民共和國證券法), as enacted by the Standing Committee of the Ninth National People’s Congress on December 29, 1998 and effective on July 1, 1999, and subsequently amended on August 31, 2014, as amended, supplemented or otherwise modified from time to time

[REDACTED]

“Primemont Capital” Primemont Capital Management Co., Ltd. (鼎峰資本管理有限公司, formerly known as Primemont Venture Capital Co., Ltd. (鼎峰創業投資有限公司)), a limited liability company established under the laws of the PRC on April 8, 2010 and was one of our Shareholders during the Track Record Period until May 30, 2014. As of May 30, 2014, the date on which Primemont Capital ceased to be our Shareholder, it was held by Beijing Fenghui Futong Investment Co., Ltd. (北京豐匯富通投資有限公司) and Fubang Asset Management Co., Ltd. (富邦資產管理有限公司), both being Independent Third Parties, as to 50% and 50%, respectively “Promoter(s)” the promoters of our Company, namely Mr. Ruan Hongliang (阮洪良先生), Ms. Jiang Jinhua (姜瑾華女士), Ms. Ruan Zeyun (阮澤雲女士), Mr. Zheng Wenrong (鄭文榮先生), Mr. Shen Fuquan (沈福泉先生), Mr. Zhu Quanming (祝全明先生), Mr. Wei Yezhong (魏葉忠先生), Mr. Shen Qifu (沈其甫先生), Ms. Tao Hongzhu (陶宏珠女士) and Mr. Wei Shutao (魏述濤先生)

“Regulation S” Regulation S under the U.S. Securities Act
“RMB” or “Renminbi” Renminbi, the lawful currency for the time being of the PRC

“SAFE” the State Administration of Foreign Exchange of the PRC (中華人民共和國國家外匯管理局), the PRC governmental agency responsible for matters relating to foreign exchange administration, including local branches, when applicable

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DEFINITIONS
“SAIC” or “State Administration the State Administration for Industry and Commerce of the for Industry and Commerce” PRC (中華人民共和國國家工商行政管理總局)
“Sanctioned Countries” countries on which trade or economic sanctions were imposed by certain overseas governments, such as the U.S. government and the member states of the European Union
“SAT” the State Administration of Taxation of the PRC (中華人民共和國國家稅務總局)
“SFC” or “Securities and Futures the Securities and Futures Commission of Hong Kong Commission”
“SFO” or “Securities and Futures the Securities and Futures Ordinance (Chapter 571 of the Ordinance” Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“Shanghai Flat” Shanghai Flat Glass Co., Ltd.*(上海福萊特玻璃有限公司), a limited liability company established under the laws of the PRC on June 6, 2006 and a wholly-owned subsidiary of our Company
“Share(s)” Domestic Share(s) and H Share(s)
“Shareholder(s)” holder(s) of the Domestic Share(s) or H Share(s), as the case may be

[REDACTED]

“Sole Sponsor” BOCI

“Special Regulations” Special Regulations of the State Council on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies (國務院關於股份有限公司境外募集股份及上市的特別規定), promulgated by the State Council on August 4, 1994 and became effective on the same date, as amended, supplemented or otherwise modified from time to time

[REDACTED]

“State Council” the State Council of the PRC (中華人民共和國國務院)
“Stock Exchange” or “Hong The Stock Exchange of Hong Kong Limited Kong Stock Exchange”
“subsidiary(ies)”

has the meaning ascribed to it in the Listing Rules

“Substantial Shareholder(s)” has the meaning ascribed to it under the Listing Rules

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	DEFINITIONS
“Supervisor(s)”	supervisors of our Company
“Track Record Period”	the years ended December 31, 2012, 2013 and 2014 and the
	five months ended May 31, 2015
“Underwriters”	the Hong Kong Underwriters and the International
	Underwriters
“Underwriting Agreements”	the [REDACTED] Agreement and the [REDACTED]
	Agreement
“U.S.” or “United States”	the United States of America, its territories, its possessions
	and all areas subject to its jurisdiction
“US$”, “USD” or “U.S. dollar(s)”	United States dollars, the lawful currency for the time being
	of the United States
“U.S. Securities Act”	the U.S. Securities Act of 1933, as amended from time to
	time, and the rules and regulations promulgated thereunder
“VDN”	Vietnamese dong, the lawful currency of the Socialist
	Republic of Vietnam
“Yangtze River Delta”	refers to 16 cities in Shanghai, southern Jiangsu, eastern and
	northern Zhejiang, China, namely, Shanghai, Nanjing,
	Suzhou, Wuxi, Changzhou, Yangzhou, Zhenjiang, Nantong,
	Taizhou (Jiangsu Province), Hangzhou, Ningbo, Huzhou,
	Jiaxing, Shaoxing, Zhoushan and Taizhou (Zhejiang
	Province)
“Zhejiang Flat”	Zhejiang Flat Glass Co., Ltd.* (浙江福萊特玻璃有限公司), a
	limited liability company established under the laws of the
	PRC on February 14, 2011 and a wholly-owned subsidiary of
	our Company
“Zhejiang Jiafu”	Zhejiang Jiafu Glass Co., Ltd.* (浙江嘉福玻璃有限公司), a
	limited liability company established under the laws of the
	PRC on August 15, 2007 and a wholly-owned subsidiary of
	our Company
“%”	per cent

Certain amounts and percentage figures included in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

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DEFINITIONS

In this document, unless otherwise stated, certain amounts denominated in Renminbi or U.S. dollars have been translated into Hong Kong dollars or U.S. dollars at an exchange rate of RMB0.8188 = HK$1.00 or RMB6.3180 = US$1.00 or HK$7.7496 = US$1.00, respectively, for illustration purpose only. Such conversions shall not be construed as representations that amounts in Renminbi were or could have been or could be converted into Hong Kong dollars or U.S. dollars at such rates or any other exchange rates on such date or any other date.

If there is any inconsistency between the Chinese names of entities or enterprises established in the PRC and their English translations, the Chinese names shall prevail. The English translation of company names in Chinese or another language which are marked with “” and the Chinese translation of company names in English which are marked with “” is for identification purpose only.

Unless otherwise specified, all relevant information in this document assumes no exercise of the [REDACTED].

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GLOSSARY OF TECHNICAL TERMS

This glossary contains explanations of certain technical terms and abbreviations used in this
document that are in connection with our Group and our business. The terms and their assigned
meanings may not, however, correspond to standard industry meaning or usage of those terms.
“crystalline silicon” or “c-Si”
crystalline
silicon,
technology
used
in
production
of
crystalline silicon PV cells, modules and panels, which
accounts for approximately 90.5% of solar cell applications in
terms of annual installed capacity
“GW”
gigawatt
“ISO”
International Organization for Standardization
“km”
kilometer(s)
“KW”
kilowatt
“light transmission rate”
ratio of the energy of the visible spectrum from 380nm to
780nm
“Low-E coating”
coating on glasses with layers of metal or other compounds
that have low surface radiation rate
“Low-E glass”
low-emissivity glass, also known as low-emissivity coated
glass, with surface radiation of less than 0.25 as compared
with untreated glass of around 0.84
“m”
meter(s)
“mm”
millimeter(s)
“MW”
megawatt(s)
“ppm”
parts per million
“PV”
abbreviation of photovoltaic, a method of converting solar
energy into direct current electricity using semi-conducting
materials that exhibit photovoltaic effect
“PV cell”
photovoltaic cell, also commonly known as solar cell, is an
electrical device that converts the energy of light directly into
electricity by photovoltaic effect
“PV glass”
abbreviation of photovoltaic glass, one of the encapsulating
material
for
PV modules.
It
is
commonly
used
as
the
front-sheet of PV module for protection

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	GLOSSARY OF TECHNICAL TERMS
“PV module”	photovoltaic module, also known as PV module, which is
	made up of multiple PV cells in an integrated group, all
	oriented in one plane. PV modules often have a sheet of glass
	on the sun-facing side, also known as frontsheet, to allow
	light to pass through the glass while protecting the
	semi-conductor wafers. PV cells are usually connected in
	series of modules to create an additive voltage
“PV panel”	photovoltaic panel, also known as solar panel, is made up of
	several PV modules connected together
“PV raw glass”	photovoltaic raw glass, which is a raw glass manufactured
	from silica sand and other raw materials for use as raw
	material for the production of PV glass
“RoHS compliant”	component is tested for the presence of hazardous materials
	including Lead (Pb), Cadmium (Cd), Mercury (Hg),
	Hexavalent chromium (Hex-Cr), Polybrominated biphenyls
	(PBB), and Polybrominated diphenyl ethers (PBDE)
“silica sand”	one of the major materials for glass productions, and can be
	refined from quartzite ore or quartzrich sandstone
“soda ash”	sodium carbonate, one of the principal raw materials for glass
	productions
“SPF certification”	the certification granted to PV glass that has passed the
	Solartechnik Prüfung Forschung (SPF) testing procedure
	tailored for PV glasses by Institut Für Solartechnik in
	Switzerland
“sq.km.”	square kilometer(s)
“sq.m.”	square meter(s)
“thin film PV cells”	thin-film photovoltaic cells, photovoltaic cells that involves
	depositing multiple thin layers of chemical materials on a
	substrate such as glass in its production

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FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements and information relating to us and our subsidiaries that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this document, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “going forward,” “intend,” “may,” “ought to,” “plan,” “project,” “seek,” “should,” “will,” “would,” “wish” and similar expressions, as they relate to our Company or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our Company’s management with respect to future events, operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this document. You are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. The risks and uncertainties facing our Company which could affect the accuracy of forward-looking statements include, but are not limited to, the following:

our business prospects;
future developments, trends and conditions in the industry and markets in which we operate;
our strategies, plans, objectives and goals;
general economic conditions;
changes to regulatory and operating conditions in the industry and markets in which we operate;
our ability to reduce costs;
our dividend policy;
the amount and nature of, and potential for, future development of our business;
capital market developments;
the actions and developments of our competitors; and
certain statements in the section headed “Financial Information” in this document with respect to trend in prices, volumes, operations, margins, overall market trends, risk management and exchange rates.

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FORWARD-LOOKING STATEMENTS

Our Directors confirm that these forward-looking statements are made after due and careful consideration. Subject to the requirements of the Listing Rules, we do not intend publicly to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this document might not occur in the way we expect, or at all. Accordingly, you should not place undue reliance on any forward-looking information. All forward-looking statements in this document are qualified by reference to this cautionary statement.

See also “Risk Factors — Risk Relating to the [REDACTED] and Our H Shares — Forward looking statements contained in this document are subject to risks and uncertainties” for more information.

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RISK FACTORS

Potential investors should consider carefully all the information set out in this document and, in particular, should evaluate the following risks associated with the investment in our H Shares. You should pay particular attention to the fact that we conduct our operations in the PRC, the legal and regulatory environment of which in some respects may differ from that in Hong Kong. Any of the risks and uncertainties described below could have a material adverse effect on our business, results of operations, financial condition or on the trading price of our H Shares, and could cause you to lose all or part of your investment.

RISKS RELATING TO OUR BUSINESS AND OUR INDUSTRY

The PV glass industry could be materially and adversely affected by the fluctuations in the demand and supply and prices of PV modules.

In recent years, the global PV industry has experienced fluctuations in terms of production output and prices of the PV modules. According to the Frost & Sullivan Report, in 2011 and 2012, there was a decline in PV module price as a result of excess capacity installed in previous years and weakened demand in European countries. The prices of Chinese c-Si PV modules declined sharply from approximately RMB13 per watt in January 2010 to approximately RMB6 per watt in January 2012, according to the Frost & Sullivan Report. It was only in the second half of 2012 and 2013 that the prices of PV modules have started to level off at or around approximately RMB4 per watt as excess capacity was gradually consumed. Consequently, the prices for Chinese PV glass also experienced a steep decline between 2010 and 2012 from approximately RMB59 per sq.m. to RMB29 per sq.m., but began to stabilize at or around approximately RMB30 per sq.m. beginning in the second half of 2012, according to the Frost & Sullivan Report. In addition, some PV module manufacturers faced severe financial difficulties which impacted the business of PV component makers, including PV glass manufacturers. Some PV module manufacturers were not able to satisfy their payment obligations towards their suppliers, which in turn resulted in the suspension of the business operations of a number of PV glass manufacturers in China. We have also experienced customer default during the Track Record Period, as a result of which our allowance of doubtful debts provisioned for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015 amounted to RMB27.8 million, RMB3.7 million, RMB18.4 million and RMB9.6 million, respectively. See also “Financial Information — Description of Selected Consolidated Statements of Financial Position Items — Trade and Other Receivables” for more information.

As such, we believe the development of the PV industry is cyclical and demand for PV glass generally depends on the demand for PV modules, which is subject to a number of macroeconomic and factors outside the control of PV glass manufacturers. Such factors include, but not limited to, the following:

any decrease in the demand of PV modules in the future may lead to a decrease in the price of PV glass products;
the availability of funding for the PV industry may affect the level of investment in solar energy infrastructure;

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RISK FACTORS

the cost-effectiveness, performance and efficiency of the electricity generated by solar energy as compared to other energy sources, including conventional energy sources such as natural gas and coal, and other non-solar renewable energy sources such as wind, hydroelectric and biomass;
the availability, substance and magnitude of government subsidies and incentives for renewable energy; and
fluctuations in economic and market conditions that affect the prices of, and demand for, conventional and non-solar renewable energy sources, such as increases or decreases in the prices of natural gas, coal, oil and other types of fuel.

The demand for solar energy depends on the overall demand for electricity and the overall social and governmental support for the use of renewable energy. If there is any significant decrease in the demand for solar energy or investments in the PV industry, the demand and the prices of PV glass will decrease accordingly. Such decreases could be substantial and could result in significant excessive supply. Any market downturn, over-supply or fluctuations in the PV industry or financial difficulties faced by PV module manufacturers could have a material adverse impact on our business, financial condition and results of operations if we are not able to respond to these changes appropriately and in a timely manner.

We face significant competition in the PV glass industry, which could materially and adversely affect our profitability.

Our leading position for PV glass depends on our ability to anticipate and proactively deal with changes in economic and market conditions, and evolving PV industry trends, as well as the following factors: (i) maintaining our relationship with our large-scale PV module customers, (ii) maintaining our PV glass product quality and product certifications, (iii) improving performance of our PV glass products, and (iv) achieving the economies of scale for production to increase our profit margin. We cannot assure you that our current or potential competitors will not produce the same or similar PV glass products or products of a better quality at the same or lower prices than the prices we charge for our PV glass products. Our competitors may also react more quickly to new or emerging technologies or changes in customer preferences. In addition, we may face greater than expected downward pricing pressure as a result of possible price competition by competitors seeking to stimulate demand in order to maintain or increase market share. Such competition could materially and adversely affect our results of operations and business prospects. Any material or adverse changes in our competitive environment could cause a reduction in the sales quantity, our market share, or the sales price of our products, which would lower our profitability.

We are subject to a wide variety of laws and regulations, any failure to comply with these laws or regulations or to control costs associated with their compliance could harm our business.

We are subject to various PRC environmental laws and regulations for the production and sales of our PV glass, float glass, household glass and architectural glass products, which impose standards on the emission and treatment of pollutants created during the manufacturing process, and are required to obtain environmental protection assessment approval and acceptance from the relevant government authorities in the PRC for the operation of the production facilities.

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RISK FACTORS

As a result, we are required to obtain permits, licenses and consents, such as the mining permit for our mining activities and the production safety permit for our manufacturing operations. Any unfavorable changes in the scope of these laws and regulations, or application and interpretation of these laws and regulations, may limit or restrict our production capacity or ability or our manufacturing operation, or increase the costs in pollution control or safety improvement, or otherwise increase our cost, which may materially and adversely affect our business and operations. If we fail to comply with the laws and regulations, we may be penalized for non-compliance and may materially and adversely affect our business, operations and financial results.

Our operating results are subject to various foreign trade regulation measures, including anti-dumping and anti-subsidy imposed on imported PV glass products.

We export some of our PV glass products to customers overseas, including our customers in Europe. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, based on our internal records, our direct export of PV glass products to Europe amounted to RMB55.4 million, RMB110.4 million, RMB128.0 million and RMB32.3 million, respectively, representing 3.7%, 5.0%, 4.5% and 2.6%, respectively, of our total revenue. In 2012, the European Commission initiated anti-dumping and anti-subsidy investigations on PV glass originated from China, alleging that PV glass from China is being dumped into the European Union market at prices that were below market value and that PV glass manufacturers in China benefited from a number of subsidies granted by the PRC government. In May 2014, as a result of the investigations, the European Commission imposed definitive anti-dumping duty and countervailing duty on imports of Chinese-made PV glass. According to the anti-dumping measures imposed by the European Union, our customers were subject to an anti-dumping duty rate of 29.3% and a countervailing duty rate of 12.8% on our PV glass products that are imported into the European Union for five years. Since August 2015, the anti-dumping duty applicable to our customers who would be importing our PV glass products into the European Union has been increased to 71.4% following the conclusion of an absorption reinvestigation commenced in December 2014 by the European Commission. See “Business — Regulatory Compliance and Legal Proceedings — Anti-dumping and Anti-subsidy Investigations” in this document for details. The anti-dumping and countervailing duties imposed by the European Commission may dampen the demand of our products from our European customers, which could materially and adversely affect our business, financial condition and results of operation.

Similar duties have been imposed in the United States for PV modules imported into the United States from the PRC. In October 2012, the U.S. Department of Commerce announced its final determination on anti-dumping and anti-subsidy investigations involving C-Si PV cells imported from the PRC. In December 2014, the U.S. Department of Commerce has announced its affirmative final determination in anti-dumping duty investigations of imports of modules, laminates and/or panels consisting of c-Si PV cells from the PRC not covered by existing anti-dumping and countervailing duty orders on c-Si PV cells. As a result, the U.S. Customs and Border Protection will collect cash deposits for anti-dumping duty equals to the applicable weighted-average dumping margins and the countervailing duty equals to the final subsidy rates, The U.S. Department of Commerce has determined that the c-Si PV products from the PRC have been sold in the United States at dumping margins ranging from 26.7% to 165.0% and received countervailable subsidies from the PRC government ranging from 27.6% to 49.8%. Since we did not sell any PV modules, laminates and/or panels consisting of c-Si PV cells during the Track Record Period and up to the Latest

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RISK FACTORS

Practicable Date, the U.S. anti-dumping and countervailing duties had no direct impact on us or our products. To the best of our knowledge, information and belief, some of our PV glass customers in the PRC export c-Si PV cells to the United States. As a result, these measures will directly impact the sales volume and value of c-Si PV cells in the United States from such customers, which in turn may indirectly have material and adverse impact on the demand of our PV glass products. Furthermore, the Canada Border Services Agency has initiated investigations in December 2014 on alleged injurious dumping and subsidizing of certain PV modules and laminates originated in or exported from the PRC. The Canada Border Service agency concluded their investigations and more than ten PRC PV module manufacturers were subject to anti-dumping and countervailing tariffs. As we did not sell any PV modules and laminates during the Track Record Period and up to the Latest Practicable Date, the Canadian anti-dumping and countervailing tariffs had no direct impact on us or our products. See “Business — Regulatory Compliance and Legal Proceedings — Anti-dumping and Anti-subsidy Investigations” in this document for more information. As provisional duty has been imposed in Canada for the importation of PV modules and/or laminates from the PRC, the prices of PV panels and PV cells imported from the PRC increased as a result and thereby, may reduce their demand and price-competitiveness overseas, and may indirectly affect the demand of PV glass in China.

Due to the anti-dumping and anti-subsidy measures imposed by the European Commission, the United States and Canada, we believe the PV panels, PV cells and PV glass industries in China may be subject to increasing number of similar or other anti-dumping or anti-subsidy investigations initiated by other countries. These investigations may or may not succeed, but in the event anti-dumping duties and/or countervailing duties are imposed, they could increase the prices of PV panels, PV cells and PV glass imported from the PRC and thereby, reducing their demand and price-competitiveness overseas. To the best of our knowledge, while the anti-dumping and anti-subsidy measures imposed by the European Union, the United States and Canada against Chinese PV products manufacturers did not have any material adverse effect on the results of our operation and financial performance during the Track Record Period, we cannot assure you future investigations and anti-dumping and anti-subsidy measures will not cause any adverse impact on the demand from our customers or the price we charge for our products. If this occurs, our business, financial condition and results of operations could be materially and adversely affected.

We had net current liabilities as of December 31, 2012 and 2014 and May 31, 2015 and a significant level of indebtedness during the Track Record Period. We may be exposed to liquidity risks, and our business, financial conditions and results of operations may be materially and adversely affected as a result.

We have relied on a combination of funds generated from our operations and bank loans to finance our business operations and expansion. We had a net current liabilities position of RMB131.8 million as of December 31, 2012, which improved to a net current assets position of RMB12.5 million as of December 31, 2013, but changed to a net current liabilities position of RMB257.5 million as of December 31, 2014 and improved to a net current liabilities position of RMB115.6 million as of May 31, 2015. Our net current liabilities amounted to RMB215.8 million as of September 30, 2015. Our gearing ratio was 75.9%, 57.7%, 54.3% and 54.9% as of December 31, 2012, 2013 and 2014 and May 31, 2015, respectively. Our high level of indebtedness could materially and adversely affect our liquidity. For example, it could:

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require us to allocate a higher portion of our cash flow from operations to fund repayments of principal and interest on our borrowings and thus, reducing the availability of our cash flow from operations to fund working capital, capital expenditures and other general corporate purposes;
increase our vulnerability to adverse economic or industry conditions;
limit our flexibility in planning for, or reacting to, changes in our business or in the industry in which we operate; and
increase our exposure to interest rate fluctuations.

Our net current liabilities position exposed us to liquidity risk. Our future liquidity, the payment of trade and other payables and the repayment of our outstanding debt obligations as and when they become due will primarily depend on our ability to maintain adequate cash generated from operating activities and adequate external financing.

We intend to apply approximately 9.7% of the net proceeds of the [REDACTED] as our working capital. However, this amount of funding may not be sufficient for our future operations and we may still need to obtain loan financing from financial institutions or other persons especially when the nature of our business requires continuous investments in plant and machinery, and will involve significant capital expenditure. Therefore, we may continue to have net current liabilities and high gearing ratio in the future, which may limit our working capital for the purposes of operations or capital for our future plans, and materially and adversely affect our business, financial condition and results of operations.

We are exposed to uncertainties in relation to the Mine.

While we have a network of raw material suppliers and are continuing to seek new suppliers that can offer more competitive prices, in order to secure a more stable source of silica sand supply for our production of float glass, we have entered into a mining rights agreement with Chuzhou City Bureau of Land Resources (滁州市國土資源局) in April 2011 for the extraction right to the seventh segment of a quartzite mine located at the Lingshan-Mujishan mining zone in Fengyang County, Chuzhou City, Anhui Province, China. See “Business — Mining Rights” for more information.

We commenced the construction of the roads and mining facilities at the area of the Mine and began extracting quartzite ore from the Mine in November 2012. We sold certain amount of quartzite ore extracted from the Mine to third parties in 2013 and 2014. Since January 2015, we used certain amount of silica sand processed and refined from the quartzite ore extracted from the Mine for the production of our float glass. Since we do not have processing and refinement capabilities, we have arrangements with certain of our customers to process the quartzite ore from the Mine into silica sand. After processing by such customers, some of the silica sand can be used in the production of float

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glass. Furthermore, we outsource the extracting, blasting and drilling works at the Mine to independent third-party contractors. Since we involve various third parties for the operations of our mine, our operation of the Mine is exposed to uncertainties, including:

actual quartzite ore mined may vary from our estimates in terms of quality, tonnage and other characteristics;
encountering unusual or unexpected geological conditions;
industrial accidents;
equipment failures;
natural phenomena such as weather conditions, floods, blizzards, droughts and rock slides;
decrease in silica sand prices which may cause the mining activities that we expect to be economical to become uneconomical;
restrictions imposed by government authorities; and
quality, safety, environmental standards and performance of the works conducted by third-party contractor.

Furthermore, our ability to carry out mining activities is subject to our ability to obtain and retain necessary approvals, licenses and permits from relevant PRC government authorities and to renew them when they expire. Under the PRC Mineral Resources Law, all mineral resources in China are owned by the state. We are required to obtain certain government licenses and permits, among which mining permit is crucial for our mining activities. The owner of the mining permit is responsible for production safety, who is obligated to (i) establish safety management structure and staff sufficient safety management personnel; (ii) set up production safety responsibility system; (iii) maintain various safety management measures; and (iv) ensure capital investment in production safety. In the event that any accident is caused by a third-party contractor where the owner of the mining permit is at fault in performing its production safety obligations, it may be liable for compensation. Mining permit is also subject to annual inspection where the relevant government authorities will consider whether the mining activities in the past year have been conducted in compliance with the relevant laws and regulations. As advised by our PRC Legal Advisors, as of the Latest Practicable Date, we have obtained the requisite approvals, licenses and permits for our mining activities in all material aspects, including the mining permit and the production safety permit. See “Business — Regulatory Compliance and Legal Proceedings — Licenses and Permits” in this document. However, we may not be able to renew such approvals, licenses or permits or obtain, retain or renew other approvals, licenses and permits necessary for our mining activities in the future. If we do not pass the annual inspection of our mining permit or if we do not comply with the relevant mining and production safety regulations, we may be penalized according to the relevant laws and regulations by requiring us to suspend our business operations while conducting internal rectification, or our mining permit and production safety permit may be suspended or revoked.

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If (i) there is any delay or difficulty in the development of the Mine, (ii) there is any problem that causes the Mine to operate at less than optimal capacity, (iii) we fail to obtain or renew requisite governmental approvals, licenses or permits in time or at all, (iv) our mining permit is suspended or revoked or we have to incur additional significant costs to rectify non-compliances, (v) we commit gross negligence in screening and selecting our third-party contractor, which results in it being involved in any production safety-related accident that we are held directly liable or liable for compensation, or (vi) our third-party contractor fails to meet our quality, safety and environmental standards, we may incur additional costs and our business, financial condition and results of operations would be materially and adversely affected.

We may become a mineral company under Chapter 18 of the Listing Rules in the future.

Rule 18.01(3) of the Listing Rules defines that a mineral company as a new applicant whose Major Activity is the exploration for and/or extraction of natural resources. Major Activity is defined as an activity of an issuer which represents 25% or more of the total assets, revenue or operating expenses of the issuer based on the issuer’s latest audited consolidated financial statements.

As of the Latest Practicable Date, based on our latest audited consolidated financial statements for the period ended May 31, 2015, the relevant ratios of our Company for the Track Record Period did not exceed 25%. We are therefore not a mineral company based on the bright line tests under Chapter 18 of the Listing Rules.

In terms of compliance after Listing, Rule 18.01(3) of the Listing Rules further defines that a mineral company as a listed issuer who completes a transaction that is a major transaction, a very substantial acquisition or reverse takeover involving an acquisition of mineral or petroleum assets. If we become a mineral company under Chapter 18 of the Listing Rules after the Listing due to a major transaction, a very substantial acquisition or reverse takeover involving further acquisition of mining rights, we will be required to comply with the requirements under Chapter 18 of the Listing Rules. Furthermore, if we become a mineral company after the Listing, we will also be required to comply with the continuing obligations under Chapter 18 of the Listing Rules. We will therefore require additional time and resources to ensure compliance with the new requirements under Chapter 18 of the Listing Rules applicable to us. See also “Business — Mining Rights — Listing Rules Implications” in this document.

Our business, financial condition and results of operations may be materially and adversely affected by the Australian, Canadian, EU and U.S. sanctions against Russia, Belarus and Tunisia.

The United States and certain other jurisdictions, including Australia, Canada and the European Union, have imposed broad economic sanctions against certain countries, individuals and legal entities. These jurisdictions have sanctions against certain persons in, or prohibit the export of certain items to, Russia, Belarus and Tunisia. See “Business — International Sanctions on Our Sales to Russia, Belarus and Tunisia” in this document for details of the sanctions imposed by Australia, Canada, European Union and the United States. For the three years ended December 31, 2012, 2013, and 2014 and for the five months ended May 31, 2015, based on our internal records, we sold float glass and household glass products to our customers in Russia, which accounted for approximately 0.2%, 0.1%, 0.03% and 0.02% of our total revenue, respectively. Since June 1, 2015 and up to the

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Latest Practicable Date, we had a sales transaction made to one of our household glass customers in Russia for approximately US$0.01 million. For the year ended December 31, 2014, based on our internal records, we also sold household glass products to our customer in Belarus, representing approximately 0.004% of our total revenue. During the Track Record Period and up to the Latest Practicable Date, we had not made any other sales to Belarus. Furthermore, for the year ended December 31, 2014 and for the five months ended May 31, 2015, based on our internal records, we sold PV glass to our customer in Tunisia, representing approximately 0.005% and 0.03% of our total revenue, respectively. During the Track Record Period and up to the Latest Practicable Date, we had not made any other sales to Tunisia.

Our customers in Russia, Belarus and Tunisia are not targeted under the sanctions. However, as we intend to continue our sales to these customers and in these jurisdictions, we cannot assure you that if the scope of the sanctions were expanded, our business, financial condition and results of operations would not be materially and adversely affected. Economic sanctions laws or regulations could change in a way that could affect our business, exports or sales in these countries or other countries and/or could result in restrictions, penalties or fines.

A significant reduction in or discontinuation of government subsidies and economic incentives for the use and development of PV products would have a material and adverse impact on our business.

According to the Frost & Sullivan Report, the cost of solar energy generally exceeds the cost of other types of energy, such as petroleum and coal. To a significant extent, the demand for solar products depends on the availability and the level of government subsidies and economic incentives for the use of solar energy. Governments of the United States, European countries, such as Germany and the United Kingdom, and Asian countries, including China and Japan, have policies and initiatives to encourage the development and use of solar energy. These favorable policies accelerate the demand for PV modules and components of PV modules, including PV glass products. However, we cannot predict whether these governments will continue with these policies or incentive programs. During the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we recorded government grants amounted to RMB19.9 million, RMB13.1 million, RMB18.4 million and RMB13.8 million, respectively. These government grants mainly represented (i) incentives provided by local PRC governments in connection with our business expansion and development, technological advancement and product development efforts; and (ii) government subsidies relating to the construction of our furnaces and our PV glass and Low-E glass processing lines, the construction of our distributed PV systems, the technological upgrade of our PV glass plants and related technology, and the amount of power generated from our distributed PV systems. Until solar energy is more cost competitive than other energy sources or the difference in cost is justifiable with the benefits from the use of solar energy, any significant reduction or discontinuation of such favorable policies or incentive programs, particularly in the major solar markets, such as the United States, Germany, Japan and China, could reduce the demand for PV glass products and could have a material and adverse impact on our business and results of operations.

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We depend on a few key customers for a significant portion of our revenue, and any decrease in our sales to any one of them would affect our financial condition and results of operations.

During the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, sales to our five largest customers in aggregate accounted for about 27.7%, 25.0%, 29.3% and 34.4%, respectively, of our total sales, and sales to our largest customer for about 8.8%, 8.7%, 7.9% and 14.5%, respectively, of our total sales.

There is no assurance that these major customers will continue to place orders with us at historical levels, or that we could find sizable customers to purchase similar quantity of products should we lose any of our major customers. If these customers will substantially reduce their transaction volume or terminate their business relationship with us, our business, financial condition and results of operations would be materially and adversely affected.

We depend on our key suppliers and their failure to supply us with our requisite raw materials or at unfavorable prices would materially and adversely affect our operations and financial results.

During the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, procurement from our five largest suppliers in aggregate accounted for 44.9%, 25.0%, 30.9% and 29.2%, respectively, of our total cost of sales, and purchases from our largest supplier accounted for about 20.0%, 11.0%, 13.4% and 12.3%, respectively, of our cost of sales. The principal raw materials used in the production of our PV glass and float glass products are soda ash and silica sand. The price of silica sand has been rising over the past five years, and fluctuated between RMB268 per ton to RMB341 per ton during the Track Record Period, according to the Frost & Sullivan Report. The price of soda ash, on the other hand, declined since 2011 from close to RMB2,000 per ton to the lowest price of RMB1,240 in mid-2013, and fluctuated between RMB1,414 per ton to RMB1,522 per ton in 2014, according to the Frost & Sullivan Report. We have generally entered into framework agreements with our silica sand and soda ash suppliers. See “Business — Suppliers and Raw Materials Procurement” in this document.

If any of our major suppliers fails to meet our purchase orders on a timely basis or fails to offer us commercially acceptable terms or fails to supply us with production materials of the quality that we require or terminates its business relationship with us, we may be unable to source production materials from comparable alternative suppliers on a timely basis and on commercially acceptable terms or at all, and our business, financial condition and results of operations may be materially and adversely affected.

We may not be able to adjust our production capacity promptly and easily in response to any changing market condition, which may result in over-supply and pricing pressure.

We operate our furnaces continuously primarily because of the significant amount of fixed costs involved in the operation of the furnaces. A significant part of the fixed costs could not be saved by reducing the glass output. In addition, resumption of suspended furnaces would result in significant amount of re-starting costs. Therefore, we may maintain our existing production level even though we encounter short-term decline in demand or oversupply of PV glass and/or float glass. As a result, if

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the demand for PV glass, float glass, architectural glass and household glass products decreases for a prolonged period of time, the over-supply condition would continue, and this would result in significant pricing pressure on our respective glass products. See also “Risk Factors — Risk relating to Our Business and Our Industry — The PV glass industry could be materially and adversely affected by the fluctuations in the demand and supply, and prices of PV modules” for the impact of PV industry slowdown in 2012.

We cannot assure you that the similar PV industry slowdown will not happen again in the future. During the Track Record Period, we increased our profitability with our improved production efficiency and enhanced ability to control production cost, as well as our increased sales volume of our PV glass, household glass and architecture glass products. This strategy may not be effective in the future and in such event, our business, operating results and financial condition could experience significant volatility.

We consume large amount of fuel and electricity in our production process and any disruption in the supply of fuel and electricity would materially and adversely affect our business, financial condition and operating results.

The production of our glass products requires a significant amount and constant supply of fuel and electricity. We use fuel oil, petroleum coke and natural gas as our primary sources of fuel. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, our cost of fuel amounted to 29.6%, 22.9%, 22.8% and 24.2% of our cost of production, respectively, and the cost of electricity amounted to 12.3%, 11.6%, 12.3% and 12.7% of our cost of production, respectively. We currently procure natural gas from one single supplier as our natural gas is supplied through exclusive pipelines connected from the supplier to our production facilities. In the event there is any disruption of our natural gas supply, we will have to purchase additional fuel oil and/or petroleum coke to compensate for the reduction or loss of natural gas supply. On the other hand, if there is any disruption of our fuel oil and/or petroleum coke supply from our suppliers, we will have to either procure fuel oil and/or petroleum coke from other suppliers or to increase our use of natural gas.

Furthermore, we have commenced operation of our residual heat power generation facilities in July 2012 and our distributed PV systems in June 2014. As of May 31, 2015, our power generation facilities had a total capacity of approximately 119.5MW, which consisted of 109.2MW from the residual heat power generation facilities and 10.3MW from the distributed PV systems. Although we have not experienced any material disruption of our power generation during the Track Record Period, there is no guarantee that our internally-generated electricity supply will not be disrupted. If there is any disruption of electricity supply from our residual heat power generation facilities and distributed PV systems, we will have to purchase additional electricity from electricity supplier(s).

If any of the foregoing occurs, we may have to pay a higher procurement cost as a result and our cost of production may substantially increase, which could materially and adversely affect our business, financial condition, results of operations and prospects. See “Business — Suppliers and Raw Materials Procurement — Energy” in this document for more information.

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We may suffer losses for contingencies not covered by our insurance policies.

We maintain insurance for our vehicles and property comprehensive insurance for our production facilities. We also maintain natural disaster insurance for our power generation facilities. There are types of losses we may incur that cannot be insured or that our Directors believe are not commercially reasonable to insure, such as product liability claims or losses due to business interruption resulting from natural disasters. We could encounter product liability claims as a result of any defect found in our products. Our business could also be interrupted or otherwise adversely affected by fire, severe weather, earthquake, war, flooding, power outages or other natural disasters, accident or malicious damage to any of our production facilities. We may not have sufficient insurance coverage, or any coverage at all, for these claims or damages and we could incur significant costs. We cannot assure you that our current insurance coverage is sufficient or that we will be able to renew all or any of the existing insurance coverage. See “Business — Insurance” for more information.

Furthermore, any uninsured loss or damage to property, litigation or business disruption may result in us incurring substantial cost or diverting our resources, which could have an adverse effect on our results of operations. If we incur substantial liabilities that are not covered by our insurance policies, or if our business operations are interrupted for a significant period of time, we could incur costs and losses that could materially and adversely affect our financial condition and results of operations.

We had net operating cash outflow for the year ended December 31, 2012 and we may be exposed to liquidity risks.

Our net cash used in operating activities was RMB9.3 million for the year ended December 31, 2012 primarily reflecting (i) an increase in trade and other receivables of RMB310.0 million, mainly due to financial difficulties faced by some of our customers as the PV industry experienced a slowdown during the year; and (ii) an increase in inventories of RMB133.3 million, primarily due to a slowdown of the PV industry resulting in slower inventory turnover. Our operating cash flows may be materially and adversely affected by a variety of macroeconomic and other factors that are beyond our control. Our future liquidity, the payment of our trade and bills payables, as well as the repayment of outstanding bank loans as and when they become due, will primarily depend on our ability to maintain adequate cash flows from operating activities and proceeds from external financing. In the event that we are unable to generate sufficient cash flows from our operations to meet the demand from our operating and capital expenditures, our operations will have to be funded from alternative financing sources, which may or may not be available or on the terms favorable to us. As a result, our business, financial condition and results of operations may be materially and adversely affected.

We may not be able to obtain adequate financing for our business in the future.

We depend on cash generated from our operations as well as access to external financing to operate and expand our business during Track Record Period. Apart from the net proceeds from the [REDACTED], our future funding requirements will depend, to a large extent, on our working capital requirements and the nature of our capital expenditures, our business performance, market conditions and other factors which are beyond the control and anticipation of our management. We will also need substantial capital expenditures to maintain and continuously upgrade and expand our production

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facilities and design and development functions to keep pace with the competitive landscape and changing requirements in our industry. We purchased property, plant and equipment of approximately RMB392.5 million, RMB191.9 million, RMB193.6 million and RMB55.6 million for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, respectively. As we will continue to expand and/or improve our existing production facilities, we expect that our capital expenditures for the year ending December 31, 2015 will amount to about RMB207.6 million.

Our ability to obtain financing through bank borrowings or debt or equity financing will depend on our financial condition and results of operations, the performance of our industry and political and economic environment in China. There is no assurance that adequate funds can be obtained on acceptable terms, or at all. If capital is unavailable, we may be forced to curtail our expansion plans, which could result in an inability to successfully implement our business strategy.

Our future plans in the PRC are subject to risks and uncertainties.

Our future success depends, to a large extent, on our ability to increase our production efficiency, and our production and processing capacities. We intend to implement our future plans in the PRC, including, among other things, establishing new Low-E and Low-E composite glass processing facilities, setting up PV glass manufacturing and processing facilities in Anhui province and constructing new distributed PV systems with a total capacity of 15.0MW of electricity, we may not be able to expand our business, sustain our profitability and maintain our market-leading position in the domestic PV glass industry. See “Future Plans and Use of Proceeds” for more information of our future plans. The implementation of our future plans in the PRC will require capital investments, significant amount of managerial and technical resources, efforts and timely delivery of required plant and machinery, and is subject to the following risks and uncertainties:

cost overruns and construction delays as a result of a number of factors, many of which are beyond our control, such as our ability to secure contracts on favorable terms with equipment vendors;
delays or rejection of granting required approvals by relevant government authorities;
negative impact on the working capital available to us;
the need to finance our production facilities through bank or other borrowings, which may not be available to us on commercially reasonable terms or at all;
increase in depreciation expenses associated with our new production facilities and interest expenses associated with our future borrowings;
failure to improve our operational and financial systems and risk monitoring and management system in line with our expansion;
failure to maintain or establish relationships with our existing or prospective customers and suppliers;

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inability to secure new supply and sales contracts to match our increased production output; and
insufficient management resources to oversee and manage our production facility expansion.

Any of the above or other similar risks or uncertainties could significantly delay or otherwise restrict our ability to implement our future plans in the PRC, which could in turn adversely affect our ability to continue improving our operational efficiency and achieve desirable utilization rates or otherwise improve our business prospects and profitability.

We may not be able to successfully implement our overseas expansion plan.

During the Track Record Period, we have sold a substantial portion of our glass products to overseas customers, which we expect to continue to do so in the future. According to the Frost & Sullivan Report, the global annual production volume of PV modules is expected to grow from 2015 to 2019. Based on this growth projection, we believe we can increase our production capacity to satisfy the projected increasing demand of our PV glass products. In light of PRC government initiative that encourages domestic PV glass manufacturers to expand their production overseas, we plan to establish PV glass manufacturing facilities in Vietnam, which will help us expand our PV glass production capacity, increase our overseas PV glass sales and provide better localized services to our overseas PV glass customers, including those located in Southeast Asia, India, Europe, Korea and Japan.

While we have conducted a detailed feasibility study of our plan to establish PV glass manufacturing facilities in Vietnam with an expected daily maximum production capacity of PV raw glass of 800 tons and an expected designed annual processing capacity of PV glass of approximately 27.0 million sq.m., the success of our overseas expansion is subject to political, financial, business and other risks and uncertainties. For example, (i) there had been anti-China protests in Vietnam in 2014 and a number of factories owned by PRC nationals or corporations were damaged, looted or destroyed; (ii) we may face rising construction costs, which will negatively affect our profitability; and (iii) after commercial production begins, we could have falsely gauged market demand, which may lead to difficulties in selling our PV glass products at the prices we anticipated or we may experience longer trade and bills receivable turnover days than we expected. Any of the foregoing risks, if materialized, may materially and adversely affect our business, results of operations, financial condition and prospects. In addition, as advised by LVN & Associates, our Vietnamese legal advisors, while PV glass originated in Vietnam was not subject to any anti-dumping or anti-subsidy investigations initiated by the European Commission, the United States and Canada as of the Latest Practicable Date. However, we cannot assure you the PV glass manufactured in Vietnam will not be subject to such investigations in the future. In the event these investigations are initiated and/or if any duties or fines are imposed, our expansion plan may be adversely affected and the sales of our PV glass products manufactured in Vietnam may be adversely impacted. As a result, our business, results of operations, financial condition and prospects could materially and adversely affected.

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If we fail to maintain our product quality, our business could be materially and adversely affected.

The quality of our PV glass products is important to our customers. If we fail to continue to improve our product quality, our products may not be able to compete with other products.

We have been accredited with a number of quality certifications. The standards for these certifications may become more stringent in the future, and we may not be able to keep up with the certification requirements. If we fail to effectively maintain these certificates or our product quality, our business, financial condition, and operating results could be materially and adversely affected.

Our investments in research and development may not necessarily lead to timely improvements in technology and we may not be able to respond adequately and promptly to technological changes in the industry in which we operate.

The PV industry is rapidly developing with new technologies. Our success relies significantly on our ability to develop new PV glass products and/or improve the quality of our existing products. If we fail to accurately assess the market and technology trends, anticipate market developments and direct our efforts to relevant product development projects, our business, operating results and financial condition could be materially and adversely affected. If we fail to develop appropriate products with acceptable quality or lag behind our competitors in improving our product quality or product range, we may not be able to maintain our leading position and our operating results and prospects could be adversely affected. The unavailability and insufficiency of capital for product development projects and any areas where our employees’ experience may be lacking could also affect our research and development plans.

If we fail to effectively protect our intellectual property rights, our business could be adversely affected.

Patents, trade secrets or know-how related to our products and production processes are important to our business and competitive position. We use, among others, a combination of patent, confidentiality and non-compete agreements with our employees to protect our intellectual property rights. We have obtained the patents covering key technologies used in our production processes in China. See “Statutory and General Information — 3. Further Information about the Business — B. Our intellectual property rights” in Appendix VII to this document for more information. We cannot assure you that we will be able to obtain necessary protection for all our products and technologies in China.

The implementation of PRC intellectual property-related laws is difficult and complicated. In addition, policing unauthorized use of proprietary technologies or trade secrets is difficult and expensive, and we may need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result in substantial costs and diversion of resources and management attention, which could harm our business and competitive position. During the Track Record Period and up to the Latest Practicable Date, we did not experience any infringement of our intellectual property rights by third parties.

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We may be exposed to infringement or misappropriation claims by third parties.

Our success depends largely on our ability to use and develop our product know-how, technology and other intellectual properties used in our products and production processes. As we continue to expand our international markets and gain greater market share in the global PV glass industry, we face a higher risk of being the subject of claims for intellectual property infringement, invalidity or indemnification. Many of our current and potential competitors have made, and will continue to make, substantial investments in developing competing technologies, and have or may obtain patents that may prevent, limit or interfere with our ability to make, use or sell our existing or future products in China or overseas. The validity and scope of any claims relating to our intellectual property rights involve complex legal and factual questions and analyzes and, therefore, the outcome may be uncertain. In addition, the defense of these claims could be both costly and time-consuming, and could significantly divert the attention and resources of our management and technical personnel. Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party could cause us to:

pay damages;
seek licenses from third parties on unfavorable terms;
pay on-going royalties; or
be restricted by injunctions.

Any of these factors could prevent or restrict us from pursuing some or all of our business and result in our existing or potential customers deferring or limiting their purchase or use of our products, which could adversely affect our business, financial condition and operating results. During the Track Record Period and up to the Latest Practicable Date, we did not infringe and were not alleged to infringe any intellectual property rights owned by third parties.

Our continuing success depends on our ability to attract and retain our senior management and other quality personnel.

Our success depends on the experience and skills of our current officers, management and other quality employees. In particular, our senior management has significant experience in the PV glass industry and glass making industry. In particular, Mr. Ruan Hongliang is responsible for our overall corporate strategies formulation and management of our business operation, and he has been fundamental to our achievements to date. The loss of any of key personnel could adversely affect our ability to sustain and grow our business.

We had 2,827 employees as of May 31, 2015. There can be no assurance that we will be able to attract and retain the necessary personnel to grow and develop our business and to continue to deliver high-quality sales and customer services. Our business, financial operations and growth prospects may be materially and adversely affected if we are unable to attract and retain the experienced personnel we require.

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RISK FACTORS

Our business could be affected if there is a substantial increase in labor cost in the PRC.

Our employee benefit expenses for the year ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015 amounted to RMB130.7 million, RMB158.1 million, RMB191.6 million and RMB87.3 million, respectively, representing 8.8%, 7.2%, 6.8% and 7.1% of our total revenue, respectively. In the future, labor cost in the PRC is expected to continue to increase and additional legislations and regulations on labor protection, such as the increase in statutory minimum wages, may be enacted by the PRC government. This trend will increase the employers’ obligations to pay for more employees’ benefits and welfare. Any substantial increase in our direct labor cost will raise our cost of sales. If we are not able to pass such additional cost to our customers, our business, financial condition and operating results could be materially and adversely affected.

Extraordinary events such as epidemics, natural disasters, political unrest and terrorist attacks could adversely affect our production and the timely delivery of our products.

Certain regions in the world, including where our existing production facilities and the Mine are located, are susceptible to epidemics such as Severe Acute Respiratory Syndrome, or SARS, avian influenza or swine influenza. Past occurrences of epidemics, depending on their scale of occurrence, have caused different degrees of damage to the national and local economies in various countries and regions. A recurrence of SARS, avian influenza or swine influenza or an outbreak of any other epidemics, especially in the cities where we have operations, may result in material disruptions to our sales, which in turn could materially and adversely affect our financial condition and results of operations.

Other extraordinary events, including political unrest, terrorist attacks and natural disasters such as earthquakes, snowstorms and hurricanes, could significantly affect our operations if they occur at or near a location where our production facilities or our suppliers are situated. Such events may cause personnel casualties, loss of inventory, work disruptions and delays and damages to our production facilities. If we are not able to react quickly upon the occurrence of such extraordinary events and our operations are disrupted significantly, and the insurance policies we maintain for the contracts are not adequate to cover all the losses, our business, financial condition and results of operations may be materially and adversely affected.

RISK RELATING TO CONDUCTING OPERATIONS IN THE PRC

Adverse changes in the PRC economic, political and social conditions as well as laws and government policies, may materially and adversely affect our business, financial condition, results of operations and growth prospects.

The economic, political and social conditions in the PRC differ from those in more developed countries in many respects, including structure, government involvement, level of development, growth rate, control of foreign exchange, capital reinvestment, allocation of resources, rate of inflation and trade balance position. Before the adoption of its reform and opening up policies in 1978, the PRC was primarily a planned economy. In recent years, the PRC government has been reforming the PRC economic system and government structure. For example, the PRC government has implemented economic reform and measures emphasizing the utilization of market forces in the

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development of the PRC economy in the past three decades. These reforms have resulted in significant economic growth and social prospects. Economic reform measures, however, may be adjusted, modified or applied inconsistently from industry to industry or across different regions of the country.

We cannot predict whether the resulting changes will have any adverse effect on our current or future business, financial condition or results of operations. Despite these economic reforms and measures, the PRC government continues to play a significant role in regulating industrial development, allocation of natural and other resources, production, pricing and management of currency, and there can be no assurance that the PRC government will continue to pursue a policy of economic reform or that the direction of reform will continue to be market friendly.

Our ability to successfully expand our business operations in the PRC depends on a number of factors, including macro-economic and other market conditions, and credit availability from lending institutions. Stricter credit or lending policies in the PRC may affect our customers’ consumer credit or consumer banking business, and may also affect our ability to obtain external financing, which may reduce our ability to implement our expansion strategies. We cannot assure you that the PRC government will not implement any additional measures to tighten credit or lending standards, or that, if any such measure is implemented, it will not adversely affect our future results of operations or profitability.

Demand for our goods and services and our business, financial condition and results of operations may be materially and adversely affected by the following factors:

political instability or changes in social conditions of the PRC;
changes in laws, regulations, and administrative directives or the interpretation thereof;
measures which may be introduced to control inflation or deflation; and
changes in the rate or method of taxation.

These factors are affected by a number of variables which are beyond our control.

PRC governmental control on the convertibility of Renminbi may affect the value of your investment.

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. The majority of our income is received in Renminbi and shortages in the availability of foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy their foreign currency denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE, by complying with certain procedural requirements. Approval from appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses

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such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose any restriction on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our Shareholders.

We face foreign exchange risk, and fluctuations in exchange rates could have an adverse effect on our business and investors’ investments.

The value of the Renminbi has been under pressure of appreciation in recent years. Due to international pressures on the PRC to allow more flexible exchange rates for the Renminbi, the economic situation and financial market developments in the PRC and abroad and the balance of payments situation in the PRC, the PRC government has decided to proceed further with reform of the Renminbi exchange rate regime and to enhance the Renminbi exchange rate flexibility.

Any appreciation or depreciation in the value of the Renminbi or other foreign currencies that our operations are exposed to, will affect our business in different ways. For example, any appreciation in the Japanese Yen, Euro or other foreign currencies against Renminbi may cause a rise in prices of goods which may in turn dampen spending and investment in solar energy, and adversely affect our sales and profits. In addition, changes in foreign exchange rates may have an impact on the value of, and any dividends payable on, the H Shares in Hong Kong dollars. In such events, our business, financial condition, results of operations and growth prospects may be materially and adversely affected.

Any change in our tax treatment, including an unfavorable change in preferential enterprise tax rates in the PRC, may have a negative impact on our operating results.

On March 16, 2007, the National People’s Congress of the PRC promulgated the PRC EIT Law, which came into effect on January 1, 2008 and supersedes both the Foreign-invested Enterprise and Foreign Corporate Income Tax Law and the Provisional Regulations on Corporate Income Tax of the PRC. The PRC CIT Law consolidates the two separate tax regimes for domestic enterprises and foreign-invested enterprises and imposes a unified enterprise income tax rate of 25% for both types of enterprise.

In addition, the PRC government identified eight new technology sectors that are eligible for government support in the Measures for the Administration of Designation of High and New Technology Enterprises 《高新技術企業認定管理辦法》( ) (the “Measures”) in April 2008. In accordance with the Measures, our subsidiary, Zhejiang Jiafu, was approved as a high-technology enterprise in 2010, which entitled it to enjoy a preferential income tax rate of 15% for an initial period of three years from 2010 to 2012, and an extended period for another three years from 2013 to 2015. Although Zhejiang Jiafu is entitled to re-apply for such preferential income tax rate pursuant to the Measures, we cannot assure you that we will be able to continue to enjoy any further preferential tax treatments after the relevant certificate for Zhejiang Jiafu expires, or that we will be able to pass the required annual assessment to qualify for preferential tax treatments. Furthermore, according to the Notice of Ministry of Finance and State Administration of Taxation on Issues Concerning Preferential Policies on Enterprise Income Tax for Public Infrastructure Projects and Projects of Environmental Protection, Energy Saving and Water Conservation 《財政部國家稅務總局關於公共基礎設施項目和(

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環境保護節能節水項目企業所得稅優恵政策問題的通知》) (the “Notice”), Flat New Energy is exempt from enterprise income tax for the first three financial years from 2014 to 2016, and will be subject to 50% reduction for the subsequent three financial years from 2017 to 2019. Although Flat New Energy is entitled to apply to renew the approval on tax exemption pursuant to the Notice, we cannot guarantee we will be able to continue to enjoy preferential tax treatment with respect to Flat New Energy once its current entitlements expire. See “Financial Information — Factors Affecting Our Results of Operations — Taxation” and “Financial Information — Principal Income Statement Components — Income Tax Expenses” for more information.

Foreign individual holders of our H Shares are subject to PRC income tax and there are uncertainties as to the PRC tax obligations of foreign enterprises that are holders of our H Shares.

Under current PRC tax laws, regulations and rules, foreign individuals and foreign enterprises that are not PRC residents are subject to different tax obligations with respect to the dividends paid by us or the gains realized upon the sale or other disposition of H Shares.

Pursuant to the Notice on Matters Concerning the Levy and Administration of Individual Income Tax After the Repeal of Guo Shui Fa [1993] No. 45 (關於國稅發[1993]045號文件廢止後有關個人所得稅徵管問題的通知) issued by the SAT on June 28, 2011, we are required to withhold taxes from dividend payments to non-PRC resident individual holders of H Shares at rates ranging from 5% to 20% (usually 10%), depending on the applicable tax treaty between the PRC and the jurisdiction in which the non-PRC resident individual holder of H Shares resides. Non-PRC resident individual holders of H Shares who reside in jurisdictions that have not entered into tax treaties with the PRC are subject to a 20% withholding tax on dividends received from us.

Under the PRC EIT Law and its implementation rules, for foreign enterprises that do not have offices or establishments in the PRC, or have offices or establishments in the PRC to which their income is not related, dividends paid by us and the gains realized by such foreign enterprises upon the sale or other disposition of H Shares are ordinarily subject to PRC enterprise income tax at a rate of 10%, subject to a further reduction under a special arrangement or applicable treaty between the PRC and the jurisdiction of the relevant foreign enterprise’s residence. In accordance with the Notice of the State Administration of Taxation on the Issues Concerning Withholding the Enterprise Income Tax on the Dividends Paid by Chinese Resident Enterprises to H-share Holders Which Are Overseas Nonresident Enterprises (Guo Shui Han [2008] No. 897) 《關於中國居民企業向境外( H股非居民企業股東派發股息代繳企業所得稅有關問題通知》國稅函[2008]897號), which became effective on November 6, 2008, 10% withholding tax shall be imposed on dividends paid by Chinese resident enterprises to holders of H Shares that are overseas non-resident enterprises. These holders of H Shares may apply for tax refunds in accordance with applicable tax treaties or arrangements, if any. In addition, the PRC tax laws, rules and regulations may also change from time to time. If the tax rates stipulated in the PRC EIT Law and the related implementation rules are amended, the value of your investment in our H Shares could be materially and adversely affected.

In addition, it is also unclear whether and how the PRC individual income tax and enterprise income tax on gains realized by non-resident holders of H shares through the sale, or transfer by other means, of H shares will be collected by the PRC tax authorities in the future, although such tax has

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RISK FACTORS

not been collected by the PRC tax authorities in practice. Considering these uncertainties, non-resident holders of our H Shares should be aware that they may be obligated to pay PRC income tax on the dividends and gains realized through sale or transfers of the H Shares. See “Appendix IV — Taxation and Foreign Exchange” for more information.

Payment of dividends is subject to restrictions under PRC law.

Under PRC law and our Articles of Association, we may only pay dividends out of our distributable profits. Distributable profits are our net profits as determined in accordance with PRC GAAP or IFRS, whichever is lower, minus any recovery of accumulated losses and allocations to statutory and other reserves that we are required to make. As a result, we may not have sufficient or any distributable profits to enable us to make dividend distributions to our shareholders in the future, including periods for which our financial statements indicate that our operations have been profitable. Any distributable profits that are not distributed in a given year will be retained and available for distribution in subsequent years.

Moreover, because distributable profits are calculated differently under PRC GAAP from those under IFRS, our operating subsidiaries may not have distributable profits as determined under PRC GAAP, even if they have profits as determined under IFRS, or vice versa. Accordingly, we may not receive sufficient distributions from our subsidiaries for us to pay dividends. Any failure by our operating subsidiaries to pay dividends to us could have a negative impact on our cash flows and our ability to make dividend distributions to our shareholders in the future, including in those periods for which our financial statements indicate that our operations have been profitable.

Inflation in the PRC could negatively affect our profitability and growth.

Economic growth in the PRC has, in the past, been accompanied by periods of high inflation, and the PRC government has implemented various policies from time to time to control inflation. For example, the PRC government introduced measures in certain sectors to avoid overheating of the economy, including tighter bank lending policies and increases in bank interest rates. The effects of the stimulus measures implemented by the PRC government since the global economic crisis that unfolded in 2008 may have contributed to the occurrence of, and continuing increase in inflation in China. If such inflation is allowed to proceed without mitigating measures by the PRC government, our costs of production and sales will likely increase, and our profitability may be materially reduced, as there is no assurance that we will be able to pass any cost increases onto our customers. If the PRC government implements new measures to control inflation, these measures may also slow economic activity and reduce demand for our products and services, thereby severely hampering our growth.

The legal system of the PRC is not fully developed and there are inherent uncertainties that may affect the protection afforded to our business and our Shareholders.

Our business and operations in the PRC are governed by the PRC legal system that is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since the late 1970s, the PRC government has promulgated laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, as these laws and regulations are relatively new and continue to evolve,

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interpretation and enforcement of these laws and regulations involve significant uncertainties and different degrees of inconsistency. Some of the laws and regulations are still in the developmental stage and are therefore subject to policy changes. Many laws, regulations, policies and legal requirements have only been recently adopted by PRC central or local government agencies, and their implementation, interpretation and enforcement may involve uncertainty due to the lack of established practice available for reference. We cannot predict the effect of future legal developments in the PRC, including the promulgation of new laws, changes in existing laws or their interpretation or enforcement, or the pre-emption of local regulations by national laws. As a result, there is substantial uncertainty as to the legal protection available to us and our Shareholders. Furthermore, due to the limited volume of published cases and the non-binding nature of prior court decisions, the outcome of dispute resolution may not be as consistent or predictable as in other more developed jurisdictions, which may limit the legal protection available to us. In addition, any litigation in the PRC may be protracted and result in substantial costs and the diversion of resources and management attention.

As our Shareholder, you hold an indirect interest in our operations in China. Our operations in the PRC are subject to PRC regulations governing PRC companies. These regulations contain provisions that are required to be included in the articles of association of PRC companies and are intended to regulate the internal affairs of these companies. PRC Company Law and regulations, in general, and the provisions for the protection of shareholders’ rights and access to information, in particular, may be considered less developed than those applicable to companies incorporated in Hong Kong, the United States and other developed countries or regions. In addition, PRC laws, rules and regulations applicable to companies listed overseas do not distinguish among minority and controlling shareholders in terms of their rights and protections. As such, our minority shareholders may not have the same protections afforded to them by companies incorporated under the laws of the United States and certain other jurisdictions.

It may be difficult to effect service of process upon us, our Directors or our executive officers that reside in the PRC or to enforce against them or us in the PRC any judgments obtained from non-PRC courts.

The legal framework to which our Company is subject to is materially different from the Companies Ordinance or corporate law in other jurisdictions with respect to certain areas, including the protection of minority shareholders. In addition, the mechanisms for enforcement of rights under the corporate governance framework to which our Company is subject are also relatively undeveloped and untested. However, according to the PRC Company Law, shareholders may commence a derivative action against the directors, supervisors, officers or any third party on behalf of a company under certain circumstances.

On July 14, 2006, the Supreme People’s Court of the PRC and the Government of Hong Kong signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements Between Parties Concerned 《關於內地與香港特別( 行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排》). Under such an arrangement, where any designated people’s court in the PRC or any designated Hong Kong court has made an enforceable final judgment requiring payment of money in a civil and commercial case pursuant to a

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choice of court agreement in writing by the parties, any party concerned may apply to the relevant people’s court in the PRC or Hong Kong court for recognition and enforcement of the judgment. Although this arrangement became effective on August 1, 2008, the outcome and effectiveness of any action brought under the arrangement may still be uncertain.

Our Articles of Association provides that disputes between holders of H Shares and our Company, our Directors, Supervisors or officers, arising out of the Articles of Association or any rights or obligations conferred or imposed upon by the PRC Company Law and related regulations concerning its affairs, such as the transfer of our Shares, are to be resolved through arbitration by arbitral committees in China or the Hong Kong International Arbitration Centre (香港國際仲裁中心), rather than by a court of law. In addition, on June 18, 1999, the Supreme People’s Court of the PRC and the Government of Hong Kong signed the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and Hong Kong Special Administrative Region 《關於內地與( 香港特別行政區法院相互執行仲裁裁判的安排》). This arrangement, made in accordance with the spirit of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, was approved by the Supreme People’s Court of the PRC and the Hong Kong Legislative Council and became effective on February 1, 2000. Under the arrangement, awards that are made by the PRC arbitral authorities recognized under the Arbitration Ordinance of Hong Kong can be enforced in Hong Kong, and awards made by Hong Kong arbitral authorities are also enforceable in the PRC. However, so far as we are aware, there has not been any published report of judicial enforcement in the PRC by a holder of H shares seeking to enforce an arbitral award made by the PRC arbitral authorities or Hong Kong arbitral authorities, and there are uncertainties as to the outcome of any action brought in the PRC to enforce an arbitral award made in favor of a holder of H shares. Accordingly, we are unable to predict the outcome of any such action.

Substantially all of our Directors, Supervisors and executive officers reside within the PRC. Substantially all of our assets and substantially all of the assets of our Directors, Supervisors and executive officers are located within the PRC. The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom, Japan and many other countries. Therefore, it may not be possible for investors to effect service of process upon us or those persons in the PRC or to enforce against them or us in the PRC any judgments obtained from non-PRC courts. In addition, recognition and enforcement in the PRC of judgments of a court of any other jurisdiction in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

Any outbreak of severe contagious diseases in the PRC may cause suspension of our operations and affect the economic condition of the PRC which may, in turn, affect our operations.

All of our operations are located and carried out in the PRC. If any outbreak of severe contagious disease occurs in the PRC and is inadequately controlled, there may be a negative impact on domestic consumption, labor supply and potentially the overall GDP growth of the PRC, which, in turn, may hinder market activities and slow down the general economic growth of the PRC. As our business is sensitive to domestic consumer demand for our products and relies on domestic labor, any inadequately controlled outbreak of severe contagious disease in the PRC could materially and adversely affect our business, financial condition, results of operations and growth prospects.

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RISK FACTORS

RISK RELATING TO THE [REDACTED] AND OUR H SHARES

There has been no prior public market for our H Shares and an active trading market for our H Shares may not develop after the [REDACTED].

Prior to the [REDACTED], there has not been a public market for our H Shares. While we have applied to list and deal in the H Shares on the Stock Exchange, we cannot assure you that an active or liquid public market for our H Shares will develop or be sustained if developed. The [REDACTED] of the H Shares will be determined through negotiations between us and the [REDACTED] (on behalf for themselves and the other Underwriters of the [REDACTED]), and it may not necessarily be indicative of the market price of the H Shares after the [REDACTED] is complete. An investor who purchases H Shares in the [REDACTED] may not be able to resell such H Shares at or above the [REDACTED] and, as a result, may lose all or part of the investment in such H Shares.

Since there will be a gap of several days between pricing and trading of our H Shares, holders of our H Shares are subject to the risk that the price of our H Shares could fall during the period before trading of our H Shares begins.

The [REDACTED] of our H Shares is expected to be determined on the [REDACTED]. However, our H Shares will not commence trading on the Stock Exchange until they are delivered, which is expected to be five business days after the pricing date. As a result, investors may not be able to sell or deal in our H Shares during that period. Accordingly, holders of our H Shares are subject to the risk that the price of our H Shares could fall before trading begins as a result of adverse market conditions or other adverse developments, that could occur between the time of sale and the time trading begins.

The liquidity, trading volume and trading price of our H Shares may be volatile, which could result in substantial losses for Shareholders.

The price at which our H Shares will trade after the [REDACTED] will be determined by the marketplace, which may be influenced by many factors, some of which are beyond our control, including:

our financial results;
changes in securities analysts’ estimates, if any, of our financial performance;
the history of, and the prospects for, us and the industry in which we compete;
an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenues and cost structures such as the views of independent research analysts, if any;
the present state of our development;

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the valuation of publicly traded companies that are engaged in business activities similar to ours;
general market sentiment regarding apparel supply chain servicing and retail industries and companies;
changes in laws and regulations in China;
our inability to compete effectively in the market; and
political, economic, financial and social developments in China and worldwide.

In addition, the Stock Exchange has from time to time experienced significant price and volume fluctuations that have affected the market prices for the securities of companies quoted on the Stock Exchange. As a result, investors in our H Shares may experience volatility in the market price of their H Shares and a decrease in the value of their H Shares regardless of our operating performance or prospects.

Any possible conversion of our Domestic Shares into H Shares in the future could increase the supply of our H Shares in the market and negatively impact the market price of our H Shares.

Subject to the approval of the CSRC, all of our Domestic Shares may be converted into H Shares in the future, and such converted Shares may be listed or traded on an overseas stock exchange, provided that prior to the conversion and trading of such converted Shares any requisite internal approval by our Shareholders in a general meeting shall have been duly obtained and the approval from relevant PRC regulatory authorities shall have been obtained. However, the PRC Company Law provides that in relation to the public offering of a company, the shares of that company which are issued prior to the public offering shall not be transferred within one year from the date of the listing. Therefore, upon obtaining the requisite approval, our Domestic Shares may be traded, after the conversion, in the form of H Shares on the Stock Exchange after one year of the [REDACTED], which could further increase the supply of our H Shares in the market and negatively impact the market price of our H Shares.

Future sale or major divestment of the Shares by any of our Controlling Shareholders could materially and adversely affect the prevailing market price of our Shares.

The future sale of a significant number of our H Shares in the public market after the [REDACTED], or the possibility of such sales, by our Controlling Shareholders, could materially and adversely affect the market price of our H Shares and could materially impair our future ability to raise capital through offerings of our H Shares. Although our Controlling Shareholders are subject to a statutory lock-up on their Share as required by applicable PRC laws and regulations, any major disposal of our Shares by any of our Controlling Shareholders upon expiry of the relevant lock-up period (or the perception that these disposals may occur) may cause the prevailing market price of our H Share to fall, which could negatively impact our ability to raise equity capital in the future.

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Because the [REDACTED] per H Share is higher than the net tangible book value per H Share, purchasers of our H Shares in the [REDACTED] will experience immediate dilution.

The [REDACTED] of our H Shares is higher than the net tangible book value per Share of our H Shares immediately prior to the [REDACTED]. Therefore, purchasers of our H Shares in the [REDACTED] will experience an immediate dilution in pro forma adjusted consolidated net tangible asset value of HK$[REDACTED] per H Share (assuming an [REDACTED] of HK$[REDACTED] per H Share, being the mid-point of our [REDACTED] range of HK$[REDACTED] to HK$[REDACTED] per H Share) and existing Shareholders will receive an increase in the pro forma adjusted consolidated net tangible asset value per share of their shares. If we issue additional H Shares in the future, purchasers of our H Shares may experience further dilution.

Prior dividend distributions, if any, are not an indication of our future dividend policy.

In 2012 and 2013, our Group neither declared nor paid any dividends to its equity holders. In 2014, our Group declared dividends of RMB54.4 million to its equity holders, which was paid in full in January 2015. On September 30, 2015, our Group declared a special dividend of RMB250.0 million. We withheld RMB50.0 million from such dividend for individual income tax purposes and paid RMB200.0 million net of tax to the holders of the Domestic Shares in November 2015 with our internally available funds. The withholding tax will be settled in December 2015 using our internal funds. Any future dividend declaration and distribution by our Company will be at the discretion of our Directors and will depend on our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our Directors deem relevant. Any declaration and payment as well as the amount of dividends will also be subject to our Articles of Association and the PRC laws, including (where required) the approvals from our shareholders and our Directors. In addition, our future dividend payments will depend upon the availability of dividends received from our subsidiaries. As a result of the above, we cannot assure you that we will make any dividend payments on our H Shares in the future with reference to our historical dividends. For further details of the dividend policy of our Company, see the section headed “Financial Information — Dividend Policy” in this document.

We have significant discretion as to how we will use the net proceeds of the [REDACTED], and you may not necessarily agree with how we use them.

Our management may spend the net proceeds from the [REDACTED] in ways you may not agree with or that do not yield a favorable return to our Shareholders. We plan to use the net proceeds from the [REDACTED], including the improvement of our production efficiency, and establishing additional production facilities domestically and overseas. See “Future Plans and Use of Proceeds — Use of Proceeds” for more information.

However, our management will have discretion as to the actual application of our net proceeds. You are entrusting your funds to our management, upon whose judgment you must depend, for the specific uses we will make of the net proceeds from this [REDACTED].

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RISK FACTORS

Waivers [have been] granted from Compliance with certain requirements of the Listing Rules by the Stock Exchange. Shareholders will not have the benefit of the Listing Rules that are so waived. These waivers could be revoked, exposing us and our Shareholders to additional legal and compliance obligations.

We have applied for, and the Stock Exchange [has granted] to us, a number of waivers from strict compliance with the Listing Rules, Please see “Waivers from Compliance with the Listing Rules” for further details. There is no assurance that the Stock Exchange will not revoke any of these waivers granted or impose certain conditions on any of these waivers. If any of these waivers were to be revoked or to be subject to certain conditions, we may be subject to additional compliance obligations, incur additional compliance costs and face uncertainties arising from issues of multijurisdictional compliance, all of which could adversely affect us and our Shareholders.

We cannot guarantee the accuracy of facts and other statistics with respect to certain information obtained from the Frost & Sullivan Report contained in this document.

Certain facts and statistics in this document, including but not limited to information and statistics relating to the PV glass industry, are based on the Frost & Sullivan Report or are derived from various publicly available publications, which our Directors believe to be reliable.

We cannot, however, guarantee the quality or reliability of such facts and statistics. Although we have taken reasonable care to ensure that the facts and statistics presented are accurately extracted and reproduced from such publications and the Frost & Sullivan Report, they have not been independently verified by us, the [REDACTED], the Underwriters or any other party involved in the [REDACTED] and no representation is given as to its accuracy. We therefore make no representation as to the accuracy of such facts and statistics which may not be consistent with other information complied by other sources and prospective investors should not place undue reliance on any facts and statistics derived from public sources or the Frost & Sullivan Report contained in this document.

Forward looking statements contained in this document are subject to risks and uncertainties.

This document contains certain statements and information that are forward looking and uses forward looking terminology such as “anticipate”, “believe”, “could”, “going forward”, “intend”, “plan”, “project”, “seek”, “expect”, “may”, “ought to”, “should”, “would” or “will” and similar expressions. You are cautioned that reliance on any forward looking statement involves risks and uncertainties and that any or all of those assumptions could prove to be inaccurate and as a result, the forward looking statements based on those assumptions could also be incorrect. In light of these and other risks and uncertainties, the inclusion of forward looking statements in this document should not be regarded as representations or warranties by us that our plans and objectives will be achieved and these forward looking statements should be considered in light of various important factors, including those set forth in this section. Subject to the requirements of the Listing Rules, we do not intend to update or otherwise revise the forward looking statements in this document to the public, whether as a result of new information, future events or otherwise. Accordingly, you should not place undue reliance on any forward looking information. All forward looking statements in this document are qualified by reference to this cautionary statement.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

RISK FACTORS

You should read the entire document carefully, and we strongly caution you not to place any reliance on any information contained in press articles or other media regarding us or the [REDACTED].

There may be, subsequent to the date of this document but prior to the completion of the [REDACTED], press and media coverage regarding us and the [REDACTED], which contained, among other things, certain financial information, projections, valuations and other forward-looking information about us and the [REDACTED]. We have not authorized the disclosure of any such information in the press or media and do not accept responsibility for the accuracy or completeness such press articles or other media coverage. We make no representation as to the appropriateness, accuracy, completeness or reliability of any of the projections, valuations or other forward-looking information about us. To the extent such statements are inconsistent with, or conflict with, the information contained in this document, we disclaim responsibility for them. Accordingly, prospective investors are cautioned to make their investment decisions on the basis of the information contained this document only and should not rely on any other information.

You should rely solely upon the information contained in this document, the [REDACTED] and any formal announcements made by us in Hong Kong in making your investment decision regarding our H Shares. We do not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, nor the fairness or appropriateness of any forecasts, views or opinions expressed by the press or other media regarding our H Shares, the [REDACTED] or us. We make no representation as to the appropriateness, accuracy, completeness or reliability of any such data or publication. Accordingly, prospective investors should not rely on any such information, reports or publications in making their decisions as to whether to invest in our [REDACTED].

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WAIVERS FROM COMPLIANCE WITH THE LISTING RULES

In preparation for the Listing, we have sought the following waivers from strict compliance with the relevant provisions of the Listing Rules:

MANAGEMENT PRESENCE

According to Rules 8.12 and 19A.15 of the Listing Rules, our Company must have a sufficient management presence in Hong Kong. This normally means that at least two of the executive Directors must be ordinarily resident in Hong Kong. At present, there will be no executive Directors ordinarily resident in Hong Kong after the Listing. The senior management team of our Group is and will continue to be based in the PRC to attend to their respective duties. Further, as each of the executive Directors has a vital role in our Group’s operations, it is crucial for them to remain in close proximity to our Group’s central management located in the PRC. Accordingly, we do not, and for the foreseeable future, will not, have a sufficient management presence in Hong Kong, for the purposes of satisfying the requirements under Rules 8.12 and 19A.15 of the Listing Rules.

For the reasons set out above, the Directors consider that it would be practically difficult, unduly burdensome and not commercially feasible for us to appoint two Hong Kong residents as executive Directors or to relocate any of the existing executive Directors to Hong Kong merely for the purpose of complying with Rule 8.12 and Rule 19A.15 of the Listing Rules.

Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange [has granted] to us, a waiver from strict compliance with the requirements set out in Rules 8.12 and 19A.15 of the Listing Rules. We have made arrangements to maintain effective communication between the Stock Exchange and us as follows:

(i) both of our Company’s authorized representatives, Mr. Ruan Hongliang (阮洪良先生), an executive Director, the chairman of our Board and general manager of our Company, and Ms. Ruan Zeyun (阮澤雲女士), a joint company secretary, the Board secretary and chief financial officer of our Company, will act as our principal channel of communication with the Stock Exchange. Each of Mr. Ruan and Ms. Ruan has confirmed that he/she possesses valid travel documents and can readily travel to Hong Kong to meet with the Stock Exchange within a reasonable time upon request of the Stock Exchange, if required. They will be readily contactable by telephone, facsimile and email, and are authorized to communicate on behalf of our Company with the Stock Exchange;
(ii) both of the authorized representatives have means for contacting all Directors (including the independent non-executive Directors) promptly at all times as and when the Stock Exchange wishes to contact the Directors on any matters. To enhance communication between the Stock Exchange, the authorized representatives and the Directors, our Company has implemented a policy whereby (a) each Director will provide his or her office phone numbers, mobile phone numbers, residential phone numbers, office facsimile numbers and email addresses to the authorized representatives; (b) each Director will provide valid phone numbers or means of communication to the authorized representatives when he or she travels; and (c) all Directors will provide their mobile phone numbers, office phone numbers, email addresses and facsimile numbers to the Stock Exchange;

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WAIVERS FROM COMPLIANCE WITH THE LISTING RULES

(iii) our Company, in accordance with Rule 3A.19 of the Listing Rules, has appointed Messis Capital Limited as our compliance advisor, who will act as an additional channel of communication with the Stock Exchange. Our Company will ensure that Messis Capital Limited shall have access at all times to its authorized representatives, Directors and members of the senior management. Our Company will also procure that such persons provide promptly to Messis Capital Limited such information and assistance as it may need or may reasonably request in connection with the performance of the compliance advisor’s duties as set forth in Chapter 3A and Chapter 19A of the Listing Rules. Messis Capital Limited will advise on on-going compliance requirements and other issues arising under the Listing Rules and other applicable laws and regulations in Hong Kong for a period commencing on the Listing date at least until the date on which our Company complies with Rule 13.46 of the Listing Rules in respect of its financial results and its annual report for the first full financial year following the Listing;
(iv) meetings between the Stock Exchange and the Directors could be arranged through the authorized representatives or our Company’s compliance advisor, or directly with the Directors within a reasonable time frame. Our Company will inform the Stock Exchange promptly in respect of any change in our Company’s authorized representatives and compliance advisor; and
(v) each Director who does not ordinarily reside in Hong Kong has confirmed that either he or she possesses or can apply for valid travel documents to visit Hong Kong and will be able to meet with the Stock Exchange in Hong Kong within a reasonable period.

In these circumstances, our Company and its Directors do not envisage that there should be any difficulty for the Stock Exchange to contact (if required) any of the executive Directors and believe that the arrangements set out above are sufficient to maintain effective communication between our Company and the Stock Exchange. The Directors will ensure that disclosure of information and contact with the Stock Exchange will be made on a timely basis.

JOINT COMPANY SECRETARIES

Pursuant to Rules 3.28 and 8.17 of the Listing Rules, we must appoint a company secretary who, by virtue of his/her academic or professional qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of discharging the functions of company secretary.

Note 1 to Rule 3.28 of the Listing Rules further provides that the Stock Exchange considers the following academic or professional qualifications to be acceptable:

(a) a member of The Hong Kong Institute of Chartered Secretaries;
(b) a solicitor or barrister (as defined in the Legal Practitioners Ordinance); and
(c) a certified public accountant (as defined in the Professional Accountants Ordinance).

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WAIVERS FROM COMPLIANCE WITH THE LISTING RULES

In addition, pursuant to Note 2 to Rule 3.28 of the Listing Rules, in assessing “relevant experience”, the Stock Exchange will consider the individual’s:

(a) length of employment with the issuer and other issuers and the roles he/she played;
(b) familiarity with the Listing Rules and other relevant laws and regulations including the SFO, Companies Ordinance, Companies (WUMP) Ordinance, and the Takeovers Code;
(c) relevant training taken and/or to be taken in addition to the minimum requirement under Rule 3.29 of the Listing Rules; and
(d) professional qualifications in other jurisdictions.

Our Company has appointed Ms. Ruan Zeyun (阮澤雲女士) and Ms. Leung Wing Han Sharon (梁穎嫻) as the joint company secretaries of our Company. Ms. Leung is, among others, a member of the Hong Kong Institute of Chartered Secretaries and the Hong Kong Institute of Certified Public Accountants. Ms. Leung is an ordinarily resident in Hong Kong and is qualified to act as a joint company secretary of our Company. On the other hand, Ms. Ruan is not a certified public accountant as defined in the Professional Accountants Ordinance, a member of the Hong Kong Institute of Chartered Secretaries, nor a solicitor or barrister as defined in the Legal Practitioners Ordinance, as required under Rules 3.28 and 8.17 of the Listing Rules. However, Ms. Ruan served as the Board secretary and the chief financial officer of our Company since April 2010 and since November 2013, respectively. Ms. Ruan has relevant knowledge about the business operations and corporate culture of our Group and has relevant experience in the matters relating to the Board and corporate governance of our Company.

Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing Rules. The waiver is valid for an initial period of three years from the Listing Date. The waiver is granted on the condition that we engage Ms. Leung, who possesses all the requisite qualifications required under Rule 3.28 of the Listing Rules, to assist Ms. Ruan in her discharge of duties as a joint company secretary and in gaining the “relevant experience” as required under Note 2 to Rule 3.28 of the Listing Rules. Upon expiry of Ms. Ruan’s initial term of appointment of three years as a joint company secretary of our Company, a further evaluation of the qualifications and experience of Ms. Ruan and the need for on-going assistance would be made.

For further details about Ms. Ruan’s qualifications and experience, please refer to the section headed “Directors, Supervisors and Senior Management” in this document.

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

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DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

DIRECTORS Name *Executive Directors* Mr. Ruan Hongliang (阮洪良先生) Ms. Jiang Jinhua (姜瑾華女士) Mr. Wei Yezhong (魏葉忠先生) Mr. Shen Qifu (沈其甫先生)	Address Room 106, Building No.4 Wenweili Nanhu District Jiaxing Zhejiang Province PRC Room 106, Building No.4 Wenweili Nanhu District Jiaxing Zhejiang Province PRC 30-1201 Yuanyi Bozhuang Garden Wenchang Road Liangxiu Community Chengnan Street Economic Development District Jiaxing Zhejiang Province PRC 33-401 Jiazhou Meidu Xiucheng District Jiaxing Zhejiang Province PRC	Nationality
		Chinese Chinese Chinese Chinese

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DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

Name *Independent Non-executive Directors* Ms. Pan Yushuang (潘煜雙女士) Mr. Li Shilong (李士龍先生) Mr. Ng Ki Hung (吳其鴻先生) SUPERVISORS Name Mr. Zheng Wenrong (鄭文榮先生) Mr. Shen Fuquan (沈福泉先生)	Address 21-1502 Qinghua Fudi Garden Chengnan Road Bai Miao (Miao) Community Chengnan Street Economic Development District Jiaxing Zhejiang Province PRC No. 1221, Unit 1, Building No. 15 Fangqunyuan District No. 3 Beijing PRC Flat B 9/F Celestial Garden 5 Repulse Bay Road Repulse Bay Hong Kong Address 45#-2 Lvxi Rose Garden Jiaxing Zhejiang Province PRC 51-303 Yuanyi Bozhuang Garden Wenchang Road Liangxiu Community Chengnan Street Economic Development District Jiaxing Zhejiang Province PRC	Nationality
		Chinese Chinese Chinese Nationality
		Chinese Chinese

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DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

Name Mr. Zhu Quanming (祝全明先生) Ms. Zhang Hongming (張紅明女士) Mr. Meng Lizhong (孟利忠先生)	Address 51-103 Hanlin Fudi Jiaxing Zhejiang Province PRC Room 1802, Unit 2, Langxuan Building No.7 Jindu September Bungalows Xiuyuan Road Xiuzhou District Jiaxing Zhejiang Province PRC Room 803, Building No. 5 Xiuhuhuayuan Garden Chengxiu Road Muqiaogang Administrative Village Xincheng Street Xiuzhou District Jiaxing Zhejiang Province PRC	Nationality
		Chinese Chinese Chinese

For further information regarding our Directors and Supervisors, please refer to the section headed “Directors, Supervisors and Senior Management” in this document.

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DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

PARTIES INVOLVED IN THE [REDACTED]

Sole Sponsor

BOCI Asia Limited

26th Floor, Bank of China Tower 1 Garden Road Central Hong Kong

[REDACTED]

Legal advisors to our Company

As to Hong Kong law :

Orrick, Herrington & Sutcliffe 43rd Floor, Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong

As to PRC law :

Jiangsu Yongheng Partners

13th Floor, Changfa Science & Technology Building 222 Zhujiang Road Nanjing Jiangsu Province PRC

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DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

As to Vietnamese law : LVN & Associates Unit 503, 5th Floor HCO Building 44B Ly Thuong Kiet Hoan Kiem, Hanoi Vietnam

[REDACTED]

Auditor and Reporting Accountant Deloitte Touche Tohmatsu Certified Public Accountant 35/F, One Pacific Place 88 Queensway Hong Kong Independent technical consultant Mining Associates Limited Unit A, Level 26 Chinaweal Centre 414-424 Jaffe Road Wan Chai Hong Kong Compliance advisor Messis Capital Limited Room 1606, 16/F., Tower 2 Admiralty Centre 18 Harcourt Road Hong Kong

[REDACTED]

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CORPORATE INFORMATION	CORPORATE INFORMATION
Registered office, headquarters and principal place of business in the PRC Principal place of business in Hong Kong Company’s website Joint company secretaries Authorized representatives	1999 Yunhe Road Xiuzhou District Jiaxing Zhejiang Province PRC 18/F Tesbury Centre 28 Queen’s Road East Wanchai Hong Kong www.flatgroup.com.cn (the information contained in this website does not form part of this document) Ms. Ruan Zeyun Room 301, Building No.9, C1 Dahua City Garden Nanhu District Jiaxing Zhejiang Province PRC Ms. Leung Wing Han Sharon (HKICS, ICSA, ACCA and HKIPA) 18/F Tesbury Centre 28 Queen’s Road East Wanchai Hong Kong Mr. Ruan Hongliang Room 106, Building No.4 Wenweili Nanhu District Jiaxing Zhejiang Province PRC Ms. Ruan Zeyun Room 301, Building No.9, C1 Dahua City Garden Nanhu District Jiaxing Zhejiang Province PRC

CORPORATE INFORMATION

Registered office, headquarters and
principal place of business in the
PRC
Principal place of business in
Hong Kong
Company’s website
Joint company secretaries
Authorized representatives

1999 Yunhe Road
Xiuzhou District
Jiaxing
Zhejiang Province
PRC
18/F Tesbury Centre
28 Queen’s Road East
Wanchai
Hong Kong
www.flatgroup.com.cn
(the information contained in this website does not form
part of this document)
Ms. Ruan Zeyun
Room 301, Building No.9, C1
Dahua City Garden
Nanhu District
Jiaxing
Zhejiang Province
PRC
Ms. Leung Wing Han Sharon
(HKICS, ICSA, ACCA and HKIPA)
18/F Tesbury Centre
28 Queen’s Road East
Wanchai
Hong Kong
Mr. Ruan Hongliang
Room 106, Building No.4
Wenweili
Nanhu District
Jiaxing
Zhejiang Province
PRC
Ms. Ruan Zeyun
Room 301, Building No.9, C1
Dahua City Garden
Nanhu District
Jiaxing
Zhejiang Province
PRC

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CORPORATE INFORMATION

Audit committee	Ms. Pan Yushuang (chairman)
	Mr. Li Shilong
	Mr. Ng Ki Hung
Remuneration committee	Ms. Pan Yushuang (chairman)
	Mr. Ruan Hongliang
	Mr. Li Shilong
Nomination committee	Mr. Ruan Hongliang (chairman)
	Ms. Pan Yushuang
	Mr. Ng Ki Hung
Strategic development committee	Mr. Ruan Hongliang (chairman)
	Mr. Wei Yezhong
	Ms. Pan Yushuang
Risk management committee	Mr. Ruan Hongliang (chairman)
	Ms. Jiang Jinhua
	Ms. Pan Yushuang
H Share Registrar	[REDACTED]
Principal bankers	Bank of China Limited, Jiaxing Branch
	No. 218, Zhongshan East Road
	Jiaxing
	Zhejiang Province
	PRC
	China CITIC Bank Corporation Limited, Jiaxing
	Branch
	No. 639, Zhongshan East Road
	Jiaxing
	Zhejiang Province
	PRC
	Industrial and Commercial Bank of China Limited,
	Jiaxing Branch
	No. 419, Hexing South Road
	Jiaxing
	Zhejiang Province
	PRC

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INDUSTRY OVERVIEW

This section contains certain information which is derived from official government publications and industry sources as well as a commissioned report from Frost & Sullivan. References to Frost & Sullivan should not be considered as the opinion of Frost & Sullivan as to the value of any security or the advisability of investing in our Group. Our Directors believe that the sources of information extracted from the Frost & Sullivan Report are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false or misleading. The information extracted from the Frost & Sullivan Report has not been independently verified by us, the Sole Sponsor, the [REDACTED] the Underwriters or any other party involved in the [REDACTED] and no representation is given as to its accuracy. The information from official government publications may not be consistent with information available from other sources within or outside the PRC and Hong Kong. Neither our Group, its affiliates or advisors, the Underwriters or their affiliates or advisors, nor any other party involved in the [REDACTED] make any representation as to the accuracy, completeness or fairness of such information from official government publications. After taking reasonable care, our Directors confirmed that there was no adverse change in the market information since the date of the Frost & Sullivan Report up to the Latest Practicable Date, which may qualify, contradict or have an impact on the information in this section.

INFORMATION SOURCES

Overview

We commissioned Frost & Sullivan, an independent market research consulting firm which is principally engaged in the provision of market research consultancy services, to conduct a detailed analysis of the PV industry, the PV glass industry, the PV power station industry and the float glass industry.

During the preparation of the Frost & Sullivan Report, Frost & Sullivan undertook both primary and secondary researches, and obtained knowledge, statistics, information and industry insights on the industry trends of the PV market, PV glass market, the PV power station market and the float glass market. Primary research involved interviewing industry participants and authoritative third-party industry associations. Secondary research involved reviewing annual reports of companies, official bureaus’ databases, independent research reports or journals, and Frost & Sullivan’s proprietary database that was built up over the past decades.

As for historical data for market size and competition analysis presented in the Frost & Sullivan Report, such data was obtained from primary research including top-down interviews with all the industry participants, and from a variety of secondary research.

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INDUSTRY OVERVIEW

Key Bases and Assumptions

Frost & Sullivan used the following key bases and assumptions when preparing the Frost & Sullivan Report:

the social, economic and political environments being examined remain stable during the forecast period;
the development of the Chinese PV glass market will continue to grow during the forecast period;
the urbanization of mainland China will continue during the forecast period; and
potential demands of downstream industries will remain stable during the forecast period.

We have extracted certain information from the Frost & Sullivan Report in this section, as well as in the sections headed “Summary,” “Risk Factors,” “Business,” “Financial Information” and elsewhere in this document to provide our potential investors with a more comprehensive presentation of the industries in which we operate or in which we may operate in the future. We are contracted to pay a fee of RMB600,000 (including applicable tax) to Frost & Sullivan for the Frost & Sullivan Report.

OVERVIEW OF PV INDUSTRY

Overview of PV Technologies

PV systems convert solar energy into electrical energy. Currently, PV technologies can be classified into crystalline silicon (c-Si) PV technology and thin-film PV technology.

Crystalline Silicon (c-Si) Technology

Crystalline silicon accounts for approximately 90.5% of PV cells worldwide in terms of annual installed capacity in 2014. c-Si technology can be further divided into mono-crystalline silicon technology and multi-crystalline silicon technology. The differences between the two technologies are set forth below:

Multi-crystalline silicon is the most commonly used PV cell raw material. It consists of grains of silicon fused together that give the cell a distinctive, patterned appearance. Multi-crystalline silicon has a conversion efficiency of around 15% to 16%.
Mono-crystalline silicon is produced from single silicon crystal which is grown as a cylindrical ingot and has no grain boundaries. Mono-crystalline silicon has a higher conversion efficiency of approximately 17% to 18%, but it also has a higher production cost compared to that of multi-crystalline silicon, which has a conversion efficiency of approximately 15% to 16%, according to the Frost & Sullivan Report.

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INDUSTRY OVERVIEW

Thin-film PV Technology

Thin-film PV technology accounts for approximately 9.5% of the PV cells worldwide in terms of annual installed capacity in 2014. It can be divided into amorphous silicon (a-Si), cadmium telluride (CdTe) and copper indium gallium selenide (CIGS) based on the material used. The differences between the three technologies are set forth below:

a-Si technology involves the deposition of a layer of silicon on a raw glass. It uses less silicon raw materials compared to traditional technology and has a conversion efficiency of between 4% to 9%. According to the Frost & Sullivan Report, the production cost of a-Si technology is the lowest among all three thin-film technologies.
CdTe technology involves the use of cadmium, which is a toxic metal, and tellurium in a thin-film PV cell. This technology has a conversion efficiency of around 9-15% and is experiencing rapid growth due to its relatively low production cost as compared to CIGS.
CIGS technology is relatively new and a conversion efficiency between 10% to 15%, which to the highest among thin-film technologies, but also has the highest product cost.

PV Value Chain / PV System

The diagram below illustrates the position of PV glass manufacturing in the value chain of PV module industry:

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----- Start of picture text -----

Upstream Midstream Downstream
PV Module Lamination Process
Industrial High- PV PV Glass
SiliconGrade Silicongrade Ingot Wafer Cell Encapsulant PV PV
Crystalline Cells Module Panel
Encapsulant
Back Sheet
Junction Box
Quartz Mine Silica Sand PV Glass Frame
Solar module consists of layers of
materials which include solar glass,
encapsulant solar cell and other
accessories. In the solar module
lamination process, the solar glass is
used as the cover of solar module to
protect the solar cell.
----- End of picture text -----

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INDUSTRY OVERVIEW

The diagram below illustrates the working mechanism of a PV system:

PV cell

PV system

An electrical device that converts light energy directly into electricity by photovoltaic effect.

PV module

Made up of multiple PV cells in an integrated group, all oriented in one plane. PV modules often have a sheet of glass on the sun-facing side, also known as front sheet, to allow light to pass through the glass while protecting the semi-conductor wafers. PV cells are usually connected in series of modules to create an additive voltage.

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----- Start of picture text -----

PV Cell
----- End of picture text -----

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==> picture [22 x 14] intentionally omitted <==

==> picture [56 x 33] intentionally omitted <==

----- Start of picture text -----

PV Panel
----- End of picture text -----

Numerous PV panels are used to absorb and directly convert sunlight into electricity in PV system. The inverter changes the electrical current from direct current to alternate current.

PV panel

Several PV module connected to create PV panel.

PV Power System

According to the Frost & Sullivan Report, the PV power station market in China can generally be divided into the distributed PV station and the utility-scale PV station. Distributed PV station are PV modules installed on building rooftops, parking lots, roadways, corporate yards and smaller private or public areas, which generate moderate amount of electricity and distributed through the local electricity grid. In recent years, the government has issued numerous supportive policies and incentives aimed at boosting PRC distributed PV system installations. On the other hand, utility-scale PV station is often constructed on rural open areas, such as farmland, desert, prairies and gentle hills. It requires a large amount of capital investment and generates a higher amount of electricity as compared to distributed PV station.

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INDUSTRY OVERVIEW

The distributed PV installation grew rapidly in the last five years, from 116.5MW in 2010 to 2,050.0MW in 2014, representing a CAGR of 104.8%, while the utility-scale PV installation also made strides as it grew from 462.4MW in 2010 to 8,550.0MW in 2014, representing a CAGR of 107.4%. The annual installation is expected to grow between 2015 and 2019 with a CAGR of 0.6%. The decreasing PV module price is expected to make solar power more competitive commercially among all energy sources and boost PV installation. The following chart illustrates the annual PV station installation in China from 2010 to 2019:

Annual PV Installation, China, 2010-2019E

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----- Start of picture text -----

20,000
17,800.0 17,900.0 18,000.0 18,100.0 18,200.0
15,000 13,952.5
9,500.0 9,400.0 9,300.0 9,300.0 9,200.0
10,600.0
10,000
12,119.0
5,035.1 8,550.0
5,000 116.5 375.0 1,868.6 8,300.0 8,500.0 8,700.0 8,800.0 9,000.0
578.9 2,070.1
462.4 1,695.1 3,166.5 1,833.5 2,050.0
0
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
Utility Distributed
Annual PV Installation (MW)
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Source: National Energy Administration, Frost & Sullivan

PV Module

The overall global PV installation has enjoyed rapid growth in recent years, which increased from 17.2GW in 2010 to 46.5GW in 2014, representing a CAGR of 28.2%. In addition, PV installation in China has experienced significant growth from 2010 to 2014. According to the Frost & Sullivan Report, China’s PV installation grew from 578.9MW in 2010 to 10,600.0MW in 2014, representing a CAGR of 106.9%. The chart below illustrates the historical and expected annual PV installation of the world and China from 2010 to 2019:

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----- Start of picture text -----

80
72.3
70 67.0
61.7 18.2
60 54.6 57.1 18.1
18.0
50 46.5 17.9
17.8
40.5
10.6
40
29.7 2.1 31.5 14.0
30 5.0
54.1
17.2 0.6 43.7 48.9
20 35.9 36.8 39.2
27.6 26.5 26.6
10 16.7
0
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
China Annual Installation Rest of World
Annual PV Installation (GW)
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Source: European Photovoltaic Industry Association, Frost & Sullivan

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In the beginning of 2015, the National Energy Administration of the PRC announced that the annual PV installation target of 2015 will be 17.8GW, and in the first quarter of 2015, the PV installation was over 5.0GW. In order to achieve a cumulative installation of 100.0GW by 2019, Frost & Sullivan expects the continuation of favorable government policies and a stable growth of PV installation in China from 2016 to 2019.

According to the Frost & Sullivan Report, China is the largest producer and exporter of PV modules, with a relatively low rate of import. The major importers of PV modules are Germany, Japan and United States. The following chart illustrates the import and export of PV modules between 2010 and 2014 by China, Germany, Japan and the United States:

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----- Start of picture text -----

22,778.7 16,226.7 Import Export
20,193.8
China Germany
USD Million USD Million 13,122.2
12,787.7 12,318.8
10,150.3 7,639.1 6,770.0 6,680.7
3,955.0 2,337.8
2,238.4 2,019.3 1,280.7 1,870.0 2,165.1 3,243.72,762.6 2,009.2
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
7,659.5 4,845.7
4,488.5
4,118.0
6,027.3
Japan United States 3,578.2
USD Million USD Million
2,314.5
1,180.7 2,073.7 1,327.2
92.04 936.7 977.3 1,181.7 968.7 88.70 932.1 485.3 418.7 146.0
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
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Source: National Customs, Frost & Sullivan

c-Si PV module is the predominant type of PV module in the global market place. As the PV technology improved and silicon price continued to decline, the price of c-Si PV module also trended downwards in the past five years. In particular, the price of c-Si PV modules from China decreased substantially between 2011 and 2012 as a result of excess PV module capacity installed in the previous

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INDUSTRY OVERVIEW

years. The c-Si PV module price in China rebounded in 2013 as the excess capacity was gradually consumed and that PV installation in Asia grew as the industry made its recovery. The price of c-Si PV modules is expected to experience a gradual decline in following five years attributable to technology advancement. The chart below illustrates the price of c-Si module in China for the periods indicated:

Price of c-Si PV modules, China, 2010-2019E

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RMB/Watt
14
12
10
8
6
4
2
0
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
----- End of picture text -----

Source: Frost & Sullivan

The PV module industry in China is fairly segmented as the top ten players accounted for approximately 57.9% of the market share in 2014. The following table sets forth the top ten players in the PV module market in China by shipment between 2012 and 2014:

Company Yingli . . . . . . . . . . . . . . . . . JA Solar. . . . . . . . . . . . . . . . Trina Solar. . . . . . . . . . . . . . Suntech-Power . . . . . . . . . . . Canadian Solar . . . . . . . . . . Jinko . . . . . . . . . . . . . . . . . . Hanwha . . . . . . . . . . . . . . . . Hareon Solar . . . . . . . . . . . . ReneSola . . . . . . . . . . . . . . . Astronergy . . . . . . . . . . . . . . GD Solar . . . . . . . . . . . . . . . Risen Energy . . . . . . . . . . . ET Solar . . . . . . . . . . . . . . .		2012 Shipment (MW) 2,297.1 1,702.1 1,594.0 1,500.0 1,490.1 912.4 829.8 813.7 716.4 584.0 N/A N/A N/A		2013 Shipment (MW) 3,234.3 2,072.0 2,584.3 N/A 1,736.1 1,765.1 1,280.3 813.7 1,728.9 900.0 834.0 N/A N/A		2014
	Rank 1 2 3 4 5 6 7 8 9 10 N/A N/A N/A		Rank 1 3 2 N/A 5 4 7 10 6 8 9 N/A N/A		Rank 1 4 2 N/A 5 3 7 N/A 6 8 N/A 9 10	Shipment (MW)
						3,361.0 2,406.8 3,336.2 N/A 2,358.5 2,423.1 1,465.5 N/A 1,970.0 950.0 N/A 852.0 845.0

Source: Companies’ annual report, Frost & Sullivan

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PV Glass

PV glass is widely used in PV module by both c-Si technology and thin-film technology. PV glass could be divided into three main types, namely, ultra-clear patterned glass, ultra-clear processed float glass and transparent conductive oxide (TCO) glass. Generally, c-Si PV modules use ultra-clear patterned glass or ultra-clear processed float glass to protect the PV cell. With the low iron content of ultra-clear patterned glass and ultra-clear processed float glass, these glasses could transmit more light to c-Si PV cells as compared to ordinary glass, which improves the power generation efficiency of the PV modules. On the other hand, thin-film PV module other than CIGS PV modules generally uses TCO glass as frontsheet. TCO glass consists of an ultra-clear processed float glass with a TCO coating to act as front electrode for electricity generated by the TCO cells. The application of different coating materials divides TCO glasses into three types: fluorine-doped tin oxide (FTO), aluminum-dope zinc oxide (AZO) and indium tin oxide (ITO). One of the latest technologies in thin-film PV module technology was developed by a Japanese company by using ultra-clear patterned glass as frontsheet.

The market size of PV glass industry in China grew steadily in the last five years, where sales revenue generated from ultra-clear patterned PV glass in China increased from approximately RMB5,742.5 million in 2010 to approximately RMB7,916.5 million in 2014, representing a CAGR of 8.4%. The sales revenue of ultra-clear patterned PV glass in China is expected to increase from approximately RMB9,123.0 million in 2015 to approximately RMB14,110.9 million in 2019, representing a CAGR of 11.5%, according to the Frost & Sullivan Report. On the global scale, the PV glass industry experienced a slow-down in 2012, but recovered in 2013 and reached a market size of approximately RMB10,973.9 million in 2014. According to Frost & Sullivan, the price of PV glass in the PRC experienced a significant decline in 2011 and 2012 due to a sharp decline of PV module price from excess supply and slowdown of PV installation in the European market. The global PV industry recovered in 2013 and 2014, the price of PV modules bottomed out and remained stable during 2014, according to Frost & Sullivan. On this basis, Frost & Sullivan expects a relatively stable supply and demand of PV module, which will contribute to a stable forecast market price of PV glass from 2015 to 2019. The global PV glass industry is expected to increase from approximately RMB11,844.2 million in 2015 to approximately RMB16,677.1 million in 2019, representing a CAGR of 8.9%, according to the Frost & Sullivan Report.

As the largest producer and exporter of PV modules in the world, the production capacity and volume of China’s PV glass experienced a substantial growth in the past several years in the world as a result. The global production capacity and volume of PV glass increased from 10,800 tons/day in 2010 to 18,800 tons/day in 2014, and from 202.2 million sq.m. in 2010 to 375.1 million sq.m. in 2014, respectively, representing a CAGR of 15.0% and 16.7%, respectively. During the same period, China’s production capacity and volume of PV glass had a CAGR of 27.0% and 28.9%, respectively. It is expected that the global production capacity and volume of PV glass will increase from 20,200

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INDUSTRY OVERVIEW

tons/day in 2015 to 27,200 tons/day in 2019, and from 401.6million sq.m. in 2015 to 544.4 million sq.m. in 2019, respectively, representing a CAGR of 7.7% and 7.9%, respectively, according to the Frost & Sullivan Report. The following charts illustrate China’s historical and expected production capacity and production volume of PV glass from 2010 to 2019:

Production Capacity of PV Glass, China, 2010-2019E Production Volume of PV Glass, China, 2010-2019E

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25 23.3 500 466.1
21.8 450 434.6
19.8 394.2
20 400
17.7 353.5
15.7 350 313.3
15 13.8 300 274.6
11.0 250 223.1
10 9.2 9.6 200 173.6 178.9
150
5.3 99.4
5 100
50
0 0
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
)
Production Capacity (thousand tons/day) Production Volume (million
----- End of picture text -----

Source: Frost & Sullivan

The production volume of PV glass in China is expected to have a CAGR of 10.4% from 2015 to 2019, which is higher than the global annual PV installation during the same period because (i) there was a lag between the growth in the production of global PV modules and the growth in global PV installation; and (ii) as the leading producer of PV modules in the world, the growth of PV module manufacturers in China will be higher than the global average, which benefits the Chinese PV glass manufacturers. Furthermore, despite the fact that the PV industry in China had experienced excess capacity and oversupply a few years ago, as a result of the recovery of the PV installation globally, there was an increase in the consumption of the excess capacity of PV glass in 2014. Accordingly, the PV glass industry in China is expected to achieve a stable balance between supply and demand during the forecasted period, according to the Frost & Sullivan Report.

ANALYSIS OF PV GLASS MARKET

Competitive Analysis

Because China was the largest producer and exporter of PV modules in the world, Chinese PV glass manufacturers dominated the top five positions for global PV glass in terms of production capacity and sales revenue in 2014. In addition, in terms of PV raw glass production capacity in China, the top five PV glass manufacturers accounted for 63.3% and 65.4% of the total production capacity in 2013 and 2014, respectively. In 2013, the top five PV glass manufacturers in China were us, Xinyi, CSG, ANCAI Hi-Tech and AVIC SANXIN, accounted for 20.7%, 18.1%, 11.8%, 6.8% and 5.9% of the total

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INDUSTRY OVERVIEW

production capacity of PV raw glass in China. The following charts illustrate the top five players in the world and in China in terms of production capacity of and sales revenue from PV glass in 2014, respectively:

Top 5 Players by Sales Revenue[(1)] of PV Glass Market, Global and China, 2014

		*Global*				*China*
Rank	Company	Sales revenue (RMB million)	Market share	Rank	Company	Sales revenue (RMB million)	Market share
1	Our Company	2,078.4	18.9%	1	Our Company	2,078.4	26.3%
2	Xinyi	1,879.7	17.1%	2	Xinyi	1,879.7	23.7%
3	Almaden	825.8	7.5%	3	Almaden	825.8	10.4%
4	ANCAI Hi-Tech	797.0	7.3%	4	ANCAI Hi-Tech	797.0	10.1%
5	CSG	786.8	7.2%	5	CSG	786.8	9.9%
	Others	4,606.2	42.0%		Others	1,548.8	19.6%
	Total	10,973.9	100.0%		Total	7,916.5	100.0%

Note:

(1) Sales revenue of PV glass refers to sales revenue of PV raw glass and processed PV glass. Source: Companies’ annual reports, Frost & Sullivan

Top 5 Players by PV Glass Capacity[(1)] of PV Glass Market, Global and China, 2014

		*Global*				*China*
Rank	Company	Capacity (ton/day)	Market share	Rank	Company	Capacity (ton/day)	Market share
1	Xinyi	3,800.0	20.2%	1	Xinyi	3,800.0	27.5%
2	Our Company	2,290.0	12.1%	2	Our Company	2,290.0	16.6%
3	CSG	1,300.0	6.9%	3	CSG	1,300.0	9.4%
4	AVIC SANXIN	900.0	4.8%	4	AVIC SANXIN	900.0	6.5%
5	ANCAI Hi-Tech	750.0	4.0%	5	ANCAI Hi-Tech	750.0	5.4%
	Others	9,690.0	52.0%		Others	4,780.0	34.6%
	Total	18,850.0	100.0%		Total	13,800.0	100.0%

Note:

(1) PV glass capacity refers to PV raw glass capacity. Source: Companies’ annual reports, Frost & Sullivan

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Pricing of PV Glass in China

Along with the growth of PV installation in China, the demand of PV glass increased as a result, which caused a rise in the price of PV glass. Prior to 2006, PV glass manufacturing was dominated by foreign manufacturers, which resulted in high PV glass import prices. This stimulated the establishment of PV glass manufacturers and the expansion of PV glass industry in China.

The price of PV glass reached its peak at above RMB70 per sq.m. at the end of 2010 and dropped sharply in 2011 and 2012 due to excess supply and anti-dumping investigations initiated by the European Union and the United States, which dampened the demand for Chinese-made PV glass in these jurisdictions. The price of PV glass gradually recovered in 2013 and stabilized at about RMB30 per sq.m. in 2014. The following chart illustrates the price of ultra-clear patterned glass, being a major type of PV glass, in China from 2014 to 2019:

Price of Ultra-Clear Patterned Glass, China, 2010-2019E[(1)]

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----- Start of picture text -----

RMB/sq.m.
90
80
70
60
50
40
30
20
10
0
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
----- End of picture text -----

Note:

(1) Prices refer to 3.2 mm ultra-clear patterned tempered glass. Source: Frost & Sullivan

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INDUSTRY OVERVIEW

China’s Export of PV Glass

China’s export of PV glass increased from approximately US$630.3 million in 2010 to approximately US$1,113.3 million in 2014, representing a CAGR of 15.3%. The top five destinations for the exports of Chinese-made PV glass in 2014 were Japan, the United States, Korea, Malaysia and Singapore. The following chart illustrates the main export destinations of Chinese-made PV glass from 2010 to 2014:

Main Export Destinations of China’s PV Glass[(1)] , 2010-2014

Japan . . . . . . . . . . . USA . . . . . . . . . . . . Korea . . . . . . . . . . . Malaysia . . . . . . . . . Singapore . . . . . . . . Germany . . . . . . . . . ROW . . . . . . . . . . . Total . . . . . . . . . . . .	2010 68.9 60.5 42.2 8.4 35.0 58.9 356.4 630.3	2011 122.3 52.4 41.0 39.5 46.3 69.8 448.0 819.3	2012 2013 (US$ million) 123.6 158.6 49.4 64.2 42.0 51.8 37.9 52.2 43.1 44.8 60.2 55.3 497.4 581.5 853.6 1,008.4	2014 157.5 75.6 69.2 68.4 51.9 47.2 643.5 1,113.3	CAGR
					(%) 23.0 5.7 13.2 68.9 10.4 -5.4 15.9 15.3

Note:

(1) Export data provided by National Customs under 6-digit harmonized system code 700719, which includes all non-vehicle toughened safety glass.

Source: National Customs, Frost & Sullivan

Energy and Major Raw Material Costs of PV Glass

Energy cost is one of the major costs for the production of PV glass. According to the Frost & Sullivan Report, natural gas and fuel oil are common sources of energy for glass production. The price of natural gas imported by China is usually based on oil price and about 30% of total natural gas consumption in China is imported in the form of liquified natural gas or pipeline natural gas. In China, natural gas base price, or ex-factory price, is regulated by the NDRC and is adjusted every year. The price of natural gas that a supplier may charge is subject to price ceilings set by the local pricing control authorities and that price adjustments must be approved by these local pricing control authorities. Fuel oil, on the other hand, is a residual product of crude oil and therefore, the price of

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INDUSTRY OVERVIEW

fuel oil is dependent on the price of crude oil. The following charts illustrate the prices of natural gas and fuel oil from 2010 to 2014, respectively:

Price of Natural Gas, China, 2010-2014

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----- Start of picture text -----

200 Last year=100
150
100
50
0
01/2010 01/2011 01/2012 01/2013 01/2014 01/2015
China’s Import Natural Gas Index
----- End of picture text -----

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----- Start of picture text -----

Price of Fuel Oil, China, 2010-2014
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----- Start of picture text -----

6,000 RMB/Ton
5,000
4,000
3,000
2,000
1,000
0
01/2010 01/2011 01/2012 01/2013 01/2014 01/2015
----- End of picture text -----

Source: China Customs, Frost & Sullivan

Source: Shanghai Futures Exchange based on continuous future contract, Frost & Sullivan

Dense soda ash and silica sand are the major raw materials for glass production. The price of dense soda ash ranges between RMB1,000 and RMB2,500 per ton from 2010 to 2014, which is related to the trend of glass production as glass production is the major downstream product from dense soda ash. As for silica sand, its price varies depending on its quality, such as concentration of silicon dioxide and iron in the silica sand. The price of silica sand has been rising due the limited availability of quartzite ore for processing into silica sand while the demand of silica sand has also been increasing due to the increase in glass production. The following charts illustrate the prices of soda ash and silica sand in China between 2010 and 2014:

Price of Soda Ash, China, 2010 to 2014 Price of Silica Sand, China, 2010 to 2014

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----- Start of picture text -----

RMB/Ton RMB/Ton
2,000 340
1,835.8
322.3 321.0
320 314.0 315.2
1,468.5
1,500 1,542.5
1,337.0
300 302.5
1,345.3
1,000 280
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
----- End of picture text -----

Source: Frost & Sullivan

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INDUSTRY OVERVIEW

OVERVIEW OF FLOAT GLASS MARKET

Float Glass and Flat Glass

The glass industry has steadily grown over the past five years. The production volume of raw flat glass increased from 3,151.5 million sq.m. in 2010 to 3,963.0 million sq.m. in 2014, representing a CAGR of 5.9%. Float glass is a major type of raw flat glass, which is generally used for further processing into other glass products. The following chart illustrates the annual production volume of float glass and raw flat glass in China from 2010 to 2019:

Annual Production Volume of Raw Flat Glass[(1)] , China, 2010-2019E

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----- Start of picture text -----

5,000 4,735.9
4,559.1
4,500 4,241.9 4,395.3
4,102.7
3,894.5 3,963.0
4,000 3,689.5 3,571.0
3,500
3,151.5
3,000
3,824.1
2,500 2,750.0 2,550.0 2,950.0 3,200.0 3,312.8 3,425.2 3,549.0 3,681.3
2,000 2,400.0
1,500
1,000
500 751.5 939.5 1,021.0 944.5 763.0 789.9 816.7 846.2 877.8 911.8
0
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
Float Glass Other Types of Glass
Annual Production Volume (million sq.m.)
----- End of picture text -----

Note:

(1) Flat glass includes float glass and other types of glass. Source: National Bureau of Statistics, Frost & Sullivan

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Due to the slowdown of the real estate market in the PRC, the low-grade float glass market had overcapacity and the prices declined as a result. However, processed float glass such as Low-E glass and glass for specific uses such as PV glass and ultra-thin glass for electronics, have experienced growing demand and insufficient supply due to the downstream industries growth. During 2009 and 2010, there was an increase of fixed asset investment, which stimulated the expansion of glass production capacity but led to a decrease in price from 2011. The following chart illustrates the prices of float glass and flat glass in China from 2010 to 2014:

Price of Raw Glass, China, 2010-2014

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----- Start of picture text -----

RMB/sq.m.
25
Float Glass Flat Glass
20
15
10
01/2010 07/2010 01/2011 07/2011 01/2012 07/2012 01/2013 07/2013 01/2014 07/2014 01/2015
----- End of picture text -----

Source: China Glass Industry Association, Frost & Sullivan

Processed Glass

Glass Curtain Wall

Float glass can be further processed into glass curtain wall and household glass, among others. The glass curtain wall industry in China grew steadily in the past five years from approximately RMB99.2 billion in 2010 to approximately RMB140.2 billion in 2014, representing a CAGR of 9.0%. The following chart illustrates the production value of glass curtain wall industry in China from 2010 to 2019:

Production Value of Glass Curtain Wall Industry, China, 2010-2019E

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----- Start of picture text -----

Billion RMB
200 192.7
180.1
168.5
157.7
147.8
150 140.2
128.5
122.0
111.6
99.2
100
50
0
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
----- End of picture text -----

Source: China Construction Metal Structure Association, Frost & Sullivan

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OVERVIEW OF LOW-E GLASS MARKET

Low-E glass is a type of glass that is coated with a thin film to reduce the emission of radiant infrared energy. Low-E glass and Low-E composite glass are generally used in the real estate industry to improve the energy efficiency by reducing thermal exchange between the building and the outside environment.

The Chinese government is devoted to improve the energy efficiency and has carried out multi-stage plan to improve the energy-saving ratio. Until 2010, over 95% of new buildings in China have an energy-saving standard of 50% and the target is to increase this standard to 65% for most of the new buildings from 2016. This energy-saving standard is benchmarked against the general energy consumption between 1980 and 1981 in China. The sales volume of Low-E glass in China for the year ended December 31, 2014 amounted to 158.2 million sq.m., and the top five players accounted for 66.2% of the total sales volume of Low-E glass in China. The top five players in this market are Xinyi Glass, Kibing, CSG, Taiwan Glass and SYP with market share of 18.0%, 14.2%, 13.3%, 11.4% and 9.3%, respectively, based on the sales volume of Low-E glass in China for the year ended December 31, 2014. The rest of the 33.8% of the sales volume of Low-E glass in 2014 in China were contributed by numerous other producers. With the rising standard on building energy efficiency in China, the use of Low-E glass in new buildings is expected to increase significantly and the sales volume of Low-E glass in China is expected to reach 280.9 million sq.m. in 2020, according to the Frost & Sullivan Report.

MARKET DRIVERS, RESTRAINTS AND INDUSTRY TRENDS

Driving Forces of the PV Industry, PV Glass Industry and PV Power Station Industry in China

PV technology is well recognized as an environmentally friendly energy production source and is pollution-free for its use. The PRC government has committed under the Copenhagen Accord that China will reduce its carbon dioxide emission per unit of GDP by 40% to 45% from the 2005 level, and to increase the share of non-fossil fuels in the primary energy use to 15% by 2020. In order to achieve these targets, the use of PV technology for power generation is expected to grow. According to EPIA, the new installations of PV systems in China in 2013 accounted for 43% of the total cumulative PV capacity worldwide. According to the Frost & Sullivan Report, it is expected that the rapid PV installation growth will continue in China in the coming years as the energy structure in China is undergoing adjustments, which will likely result in increased demand for PV glass and PV power station.

The PRC government has been proactively stimulating the PV industry in the past. For example, the Notice of Strengthening the Management of PV Construction and Operation 《關於進一步加強( 光伏電站建設與運行管理工作的通知》) issued by the National Energy Administration in October 2014 has aimed to maintain a stable and fast-paced growth for the PV industry. Furthermore, the Relevant Opinion of the State Council in Improving the Healthy Development of Solar PV Industry (《國務院關於促進光伏產業健康發展的若干意見》) issued by the State Council in July 2013 encourages technical innovation for PV raw material, and requires the standardization of quality certification system for PV raw material in order to expedite technology upgrades and decrease PV

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INDUSTRY OVERVIEW

manufacturing cost. Moreover, the State Council has targeted to achieve an urbanization rate of 60% by 2020, through which at least 300 million new urban population will need to be supplied with electricity. Therefore, the demand of PV power generation will likely increase to meet the new needs.

Driving Forces of the Float Glass Industry in China

The float glass market in China is heavily dependent on the sustainable development of the real estate market. While the current real estate market in China is experiencing adjustments, resulting in a lower growth rate, the long term demand for real estate is relatively healthy due to China’s continuing urbanization and natural population increase, which, in turn, will stimulate the demand for float glass going forward. In addition, the demand for float glass is driven by the popularity of glass materials in modern architecture, which frequently use of float glass as a pivotal building material due to aesthetic considerations and its energy efficiency features, and the increasing demand for home decoration and interior design, which is driven by the rising per capita GDP in China.

Restraints of the PV Industry, PV Glass Industry and PV Power Station Industry in China

With the support of the PRC government and high profit of the PV industry in the past, numerous PV glass manufacturing companies established additional PV glass production lines. As a result, there was a surge of PV glass production capacity in China. However, with the slowdown of the global PV market beginning in 2012 and well into 2013, the excess capacity caused an oversupply of PV glass in China, which led to a sharp decrease in price of the PV glass and in the profitability of PV glass manufacturers. Moreover, with the rapid increase in PV glass production capacity, reliability and quality of PV glass became a concern, such as glass self-bursting, moisture ingress and bypass diode failure, which caused a negative impact on the efficiency of the PV system.

Moreover, PV modules and PV glass products from China were subjected to various anti-dumping and anti-subsidy investigations and duties in the European Union, the United States and Canada. These measures have and will continue to impair the development of the PV industry in China. See “Business — Regulatory Compliance and Legal Proceedings — Anti-dumping and Anti-subsidy Investigations” for more information.

Market Trend of PV Industry, PV Glass Industry and PV Power Station Industry in China

The market trend of the PRC PV industry, PV glass industry and PV power station industry can be characterized as involving increasing demand, technology advancement and increasing market consolidation. It is expected that the demand of PV installation will continue to grow in China in the coming years and it is expected that the demand for PV glass and PV power station will grow along with the increase in market demand of solar energy in China.

PV module and PV glass technology is constantly upgraded to enhance energy conversion efficiency of PV modules by minimizing light reflection and increasing light absorption of the glass to increase the light transmission rate. Furthermore, the PRC government has published a series of relevant policies and regulations involving technology standards and production lines transformation

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to further promote technology advancement of the entire industry. It has also published PV glass standards and put in place quality certification system to ensure the light transmission rate, product durability and reliability of PV glass. Therefore, it is expected that quality of PV glass will improve under these quality assurance systems.

On the other hand, as numerous PV producers in China have surplus production capacity, the PRC government has recently issued guidelines for consolidating PV manufacturing companies. For example, the Relevant Opinion of Further Optimizing Market Environment of PV Enterprise Merger and Restructuring* 《關於進一步優化光伏企業兼併重組市場環境的意見》( ) issued by the Ministry of Industry and Information Technology in December 2014 encourages key PV companies to merge and to restructure, which will be a main trend for the PV glass industry going forward.

ENTRY BARRIERS

According to the Frost & Sullivan Report and the relevant laws and regulations in the PRC, key entry barriers of China’s PV glass industry include the following:

Capital Barrier — Significant capital investment is generally required to establish a PV glass production line, including, but not limited to, production equipment cost, raw materials storage, environment protection compliance and sales expenses. Furthermore, due to different production technologies between ordinary glass and PV glass, ordinary glass production lines could not be easily switched to PV glass production lines.

Production Quality and Certification — PV glass is a key component in PV module production, which directly influences the efficiency and lifespan of PV module. As such, product certification is generally required for exporting PV glass products to overseas markets. Certifications and compliance with any of the Solartechnik Prüfung Forschung (SPF), Restriction of Hazardous Substances (RoHS) and Microgeneration Certification Scheme (MCS) are generally accepted as quality assurance internationally. New entrants must be able to obtain and utilize mature production technologies and maintain satisfactory product quality before they could export PV glass to the overseas market.

Customer Relationship — It is crucial for PV glass manufacturers to establish and maintain solid and stable customer relationships with large-scale PV module customers in order to gain market share. Early market entrants have cultivated brand loyalty through long-term relationships with their customers, which creates significant impediment to new entrants.

Scale Effect Barrier — In the production of PV glass, large-scale furnaces can usually substantially decrease the per unit cost of PV glass. Leading PV glass manufacturers have more competitive advantages over smaller-sized players or new market entrants because the leading PV glass manufacturers are able to spread-out their fixed cost, such as the costs of machinery, building, rent and energy, over larger number of units of products, and thereby, achieving higher gross profit margin.

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Technology Barrier — PV glass must have high light transmission rate and high shock resistance level. In order to meet these requirements, the manufacturing technology of PV glass is more advanced as compared to ordinary glass in order to ensure that the PV glass products will meet such higher quality requirements. Manufacturers must possess the advanced manufacturing technology in order to be able to produce PV glass.

Regulatory Approvals — The construction and operation of glass furnaces in the PRC is subject to various regulatory approvals, including the approval from NDRC and environmental protection assessment approval by the relevant PRC environmental authority. New market entrants will be required to obtain these necessary approvals and permits before commencing operation of glass furnaces.

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APPLICABLE LAWS AND REGULATIONS

APPLICABLE PRC LAWS AND REGULATIONS

Competent Authorities in the Industry

National Development and Reform Commission

NDRC provides supervisory and administrative guidance on industrial investment in glass and deep processing of glass and is mainly responsible for formulating industrial policies, taking the responsibility of planning major construction projects and productivity arrangement, formulating objectives and policies for optimizing the major economic structure, guiding new projects and technological reforms, coordinating energy saving and emission reduction, promoting industrial restructuring, encouraging new products that are energy saving and environmentally friendly, and guiding and improving the deep processing rate of glass.

Ministry of Industry and Information Technology

The Ministry of Industry and Information Technology is responsible for studying and proposing industry development strategies, drawing up and organizing the implementation of industry plans and industrial policies, promoting the strategic adjustment, optimization and upgrade of the industrial structure, putting forward recommendations on policies of optimizing the industrial layout and structure, drafting relevant laws and regulations, formulating rules, drawing up and organizing the implementation of industry technical specifications and standards, and guiding industry quality control and so on.

China Architectural and Industrial Glass Association

China Architectural and Industrial Glass Association is a national industry self-regulatory organization, which undertakes the functions of guiding and serving the glass industry and is mainly responsible for, among other things, industrial and market research, industry self-regulation and putting forward recommendations and opinions on industrial development to government authorities on behalf of member enterprises. The association also organizes the industry to take anti-dumping, countervailing and supporting measures and safeguard the legitimate interests of the industry.

Laws and regulations relating to the processing of flat glass and PV glass

Laws and regulations relating to the industry of the deep processing of flat glass and glass

Pursuant to the Regulations on Architectural Safety Glass* 《建築安全玻璃管理規定》( ) promulgated by NDRC, the Ministry of Construction, the State Administration of Quality Supervision, Inspection and Quarantine and the State Administration for Industry and Commerce on December 4, 2003 and coming into effect January 1, 2004, safety glass production enterprises must organize production in accordance with the national standards. All safety glass products manufactured shall meet the requirements of the national standards. The national quality inspection authority and the industrial and commercial administration authority are responsible for the supervision and administration of product quality in the architectural safety glass production and circulation sectors. The national inspection and quarantine authority is responsible for the supervision and administration

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of imported safety glass. The competent construction administration authority is responsible for the administration and supervision of the usage and installation of architectural safety glass in local buildings. China Architectural and Industrial Glass Association shall implement self-regulation by guiding enterprises to comply with industrial standards and regulations and assist the relevant government authorities in urging enterprises to implement relevant regulations.

Pursuant to the Implementation Rules for Compulsory Certification of Safety Glass* 《安全玻( 璃類強制性認證實施規則》) promulgated by the Certification and Accreditation Administration of the PRC and coming into effect on July 12, 2006, compulsory certification is implemented for safety glass products such as laminated glass, tempered glass and hollow glass.

Pursuant to the Several Opinions on Promoting the Industrial Restructuring of Flat Glass* 《關( 於促進平板玻璃工業結構調整的若干意見》) promulgated by the NDRC, the Ministry of Land and Resources, the former Ministry of Construction, the People’s Bank of China, the General Administration of Quality Supervision, Inspection and Quarantine, the State Environmental Protection Administration and coming into effect on November 30, 2006, the state (i) implements classification guidance for the development of the glass industry and strictly controls new projects; (ii) further improves technical regulations and standards to step up efforts in implementing and supervising inspection; (iii) enhances the quality and environmental protection law enforcement supervision, strengthens quality and environmental checks, establishes a long-lasting regulatory mechanism, reinforces daily supervision and administration; and (iv) firmly eliminates small-scale, high energy consumption, poor quality and backward “flat pull technology” that causes serious pollution to the environment.

Pursuant to the Several Opinions on Curbing Overcapacity and Redundant Construction in Some Industries and Guiding the Sound Development of Industries* 《關於抑制部分行業產能過剩和重複建( 設引導產業健康發展的若干意見》) promulgated by the State Council and coming into effect on September 26, 2009, to curb the obvious overcapacity in the flat glass industry, the State Council has clarified the industrial policy guidelines: Strictly control new production capacity for flat glass, follow the principles of adjusting the structure, eliminating backwardness, continuing market orientation and implementing rational layout to develop deeply processed glass with high-end uses; encourage business combination and reorganization, support large conglomerates to develop glass with a high technology content such as electronic flat panel display glass, PV glass and Low-E coating as well as quality float glass projects, provided that the plan is complied with. Meanwhile, nine countermeasures, namely, strictly controlling market entry, enhancing environmental regulations, supplying and using land according to applicable laws and regulations, implementing a neutral monetary policy, strictly enforcing project approval and management, accomplishing corporate mergers and reorganizations, establishing an information release system, implementing the accountability system and deepening the structural reform, will be adopted to curb overcapacity and redundant construction.

Pursuant to the Notice of the General Office of NDRC on Relevant Issues on Conducting a Review of Cement and Flat Glass Construction Projects* 《國家發展改革委辦公廳關於水泥、平板玻( 璃建設項目清理工作有關問題的通知》) promulgated by NDRC and coming into effect on November 10, 2009, existing projects under construction and projects which have not commenced in respect of flat glass will be reviewed conscientiously.

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APPLICABLE LAWS AND REGULATIONS

Pursuant to the Opinions of the Ministry of Industry and Information Technology on Curbing Overcapacity and Redundant Construction and Guiding the Sound Development of the Flat Glass Industry* (《工業和信息化部關於抑制產能過剩和重複建設引導平板玻璃行業健康發展的意見》) promulgated by the Ministry of Industry and Information Technology and coming into effect on November 27, 2009, the administration of the flat glass industry will be further enhanced and improved through strictly controlling new production capacity, continuously stepping up efforts in eliminating backwardness, encouraging mergers and reorganizations of large enterprises, cooperating with relevant authorities to strictly enforce laws, supporting technological reforms of enterprises, actively developing domestic and overseas markets, establishing an information release system, and implementing the accountability system in real earnest, among other measures.

Pursuant to the 12th Five Year Development Plan for the Building Materials Industry 《建材工( 業“十二五”發展規劃》) and the 12th Five Year Development Plan for the Flat Glass Industry 《平板( 玻璃工業“十二五”發展規劃》) promulgated by the Ministry of Industry and Information Technology and coming into effect on November 8, 2011, it is proposed that focus shall be put on developing new safety energy saving glass products such as tempered glass, hollow glass and laminated glass. By 2015, the industrial structure of flat glass was significantly improved. The deep processing rate of glass increased from 36% in 2010 to 45% in 2015. In 2015, of the deeply processed flat glass, the production volume of flat glass undergoing deep processing by flat glass production enterprises reached 50% of the total production volume of deeply processed flat glass.

Catalogue for the Guidance of Industrial Structure Adjustment

Pursuant to the Catalogue for the Guidance of Industrial Structure Adjustment* 《產業結構調整( 指導目錄》) (2011 Version) (Amended) promulgated by the NDRC on March 27, 2011 and coming into effect on June 1, 2011 and amended on February 16, 2013 and coming into effect on May 1, 2013, “special float glass production lines such as ultra-thin (1.3mm or less) for use in the electronics industry, ultra-white (equivalent to 5mm thickness visible light transmittance> 90%) for use in the solar energy industry, on-line coated glass and Low-E glass; existing float glass production line using pure oxygen combustion technology, low temperature waste heat power generation technology; glass deep processing equipment and technology development and application” are the industries being encouraged.

Flat Glass Industry Access Conditions

Pursuant to the Opinions of the Ministry of Industry and Information Technology on Curbing Overcapacity and Redundant Construction and Guiding the Sound Development of the Flat Glass Industry* (《工業和信息化部關於抑制產能過剩和重複建設引導平板玻璃行業健康發展的意見》) promulgated by the Ministry of Industry and Information Technology on December 22, 2009 and coming into effect on January 10, 2010, for original enterprises or production lines which have not met the “Flat Glass Industry Access Conditions,” a plan for meeting the standards shall be devised with improvement and enhancement made gradually through overhauls and technological reforms to facilitate the transformation and upgrading of enterprises. New projects put into production and projects under construction after the promulgation and implementation of the “Flat Glass Industry Access Conditions” on September 10, 2007 must meet the access conditions. Those not meeting the standards are required to make rectification within a prescribed time limit, failing which, new projects

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are not allowed to be put into production and projects which have been put into production shall be suspended for rectification. For projects under construction which have not performed the relevant procedure in accordance with the requirements of the document of the Notice regarding Several Opinions on Promoting the Industrial Restructuring of Flat Glass* 《關於促進平板玻璃工業結構( 調整的若干意見的通知》) (Fa Gai Yun Xing [2006] No.2691), construction shall be suspended. For enterprises which have been published, the state will provide support in terms of new project approval and banking credit. Enterprises which have not been published are not allowed to participate in government procurement and tender and banks will no longer provide new credit support.

Pursuant to the Guiding Opinions on Resolving Serious Production Overcapacity Conflicts* 《關於化解產能嚴重過剩矛盾的指導意見》( ) promulgated by the State Council and coming into effect on October 6, 2013, for the flat glass industry, flat glass and product standards and application specifications will be formulated and amended. Doors and windows that comply with the energy saving standards will be used in new buildings and the renovation of existing buildings. While the use of Low-E hollow glass is encouraged, support will be given to the upgrading and renovation of existing production lines to increase the proportion of substrates of high-quality float glass. Functional glass will be developed and the integration of substrate production and deep processing is encouraged with the deep processing rate of flat glass reaching 50% or above. Bases for the intensive and deep processing of glass will be established. Restructuring in key production areas and environmentally sensitive areas such as Hebei, Guangdong, Jiangsu and Shandong will be accelerated. Support will be given to combination and reorganization to form a number of conglomerates with a complete industrial chain and strong core competitiveness.

Pursuant to the Standards and Conditions for the Flat Glass Industry* 《平板玻璃行業規範條( 件》) (2014 Version) promulgated by the Ministry of Industry and Information Technology and coming into effect on December 31, 2014, explicit provisions are made for the construction conditions and layout, production technology and equipment, clean production and environmental protection, energy conservation and consumption reduction and comprehensive utilization, quality control and product quality, safe production, occupational hygiene and social responsibility for the flat glass industry. Projects for the construction of flat glass shall comply with the above-mentioned standards and conditions. Existing flat glass production enterprises which have not met the above-mentioned standards and conditions will be encouraged and supported to meet the above-mentioned standards and conditions as soon as possible through measures such as technological reform and the enhancement of management. Local competent industry authorities will supervise and inspect the implementation of the above-mentioned standards and conditions by flat glass enterprises. Those which fail to meet the standards and conditions will be urged to make rectification within a prescribed time limit. The above-mentioned standards and conditions also require the relevant authorities to put them into practice in project approval, land supply, environmental impact assessment approval, energy conservation assessment, quality and safety regulation, credit financing and production operations.

Laws and Regulations Relating to Distributed Power Plants

Pursuant to the Renewable Energy Law of the People’s Republic of China 《中華人民共和國( 可再生能源法》), the Electric Power Law of the People’s Republic of China 《中華人民共和國電力( 法》) promulgated and coming into effect on April 1, 1996 and amended on August 27, 2009, the Several Opinions on Promoting the Healthy Development of the Photovoltaic Industry* 《國務院關(

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APPLICABLE LAWS AND REGULATIONS

於促進光伏產業健康發展的若干意見》) promulgated by the State Council and coming into effect on July 4, 2013 and the Interim Measures for the Administration of Distributed Photovoltaic Power Generation Projects* 《分佈式光伏發電項目管理暫行辦法》( ) promulgated by the National Energy Administration and coming into effect on November 18, 2013, competent energy authorities below the provincial level shall subject distributed PV power generation projects to filing administration and exempt the distributed PV power generation business license in accordance with the investment project administration regulations of the State Council and the annual guiding scale and indicator for local distributed PV power generation issued by the competent energy authority of the State Council.

Laws and Regulations Relating to Mining

Prospecting and Mining Rights

Pursuant to the Mineral Resources Law of the People’s Republic of China 《中華人民共和國( 礦產資源法》) promulgated by the Standing Committee of the National People’s Congress on March 19, 1986 and coming into effect on October 1, 1986 and subsequently amended on August 29, 1996 and coming into effect on January 1, 1997 and the Rules for the Implementation of the Mineral Resources Law of the People’s Republic of China 《中華人民共和國礦產資源法實施細則》( ) promulgated by the State Council and coming into effect on March 26, 1994, all mineral resources, either near the earth’s surface or underground, shall be owned by the state. A license system shall be adopted for the exploration and exploitation of mineral resources. Anyone exploring and exploiting mineral resources must make applications in accordance with the law and complete registration after being granted approval to obtain the prospecting right and the mining right. Entities which are engaged in the exploration and exploitation of mineral resources must comply with the prescribed qualifications and requirements.

The state practices a system wherein the exploration right and mining right shall be obtained with compensation; however, the state may, in light of specific conditions, prescribe reduction of or exemption from the compensation for acquiring the exploration right and mining right. Anyone who mines mineral resources must pay resource tax and resource compensation in accordance with relevant regulations of the state.

The Ministry of Land and Resources is responsible for the supervision and administration of the exploration and exploitation of mineral resources in the country. Provincial land and resources authorities are responsible for regulating the exploration and exploitation of mineral resources in their respective jurisdictions. The PRC government implements a unified registration system for mineral exploration areas. The Ministry of Land and Resources is responsible for the registration of mineral resources exploration. The State Council may authorize the relevant authorities to be responsible for the registration of the exploration of special types of mineral resources.

Applicants seeking to establish new mining enterprises must comply with certain qualification requirements as set out in the relevant laws and regulations and obtain approval from the government authorities. Applicants must provide detailed information, such as relevant mining area restrictions, mining design or mining plan, production technology, safety and environmental protection measures and other project and supporting documents, when submitting the applications.

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APPLICABLE LAWS AND REGULATIONS

Transfer of Mineral Prospecting and Mining Rights

Pursuant to the Measures for the Administration of Transfer of Mineral Prospecting Right and Mining Right 《探礦權採礦權轉讓管理辦法》( ) promulgated by the State Council and came into effect on February 12, 1998 and subsequently amended on July 29, 2014 and the Interim Provisions on the Administration of the Assignment or Transfer of Mining Rights 《礦業權出讓轉讓管理暫行( 規定》) promulgated by the Ministry of Land and Resources on November 1, 2001, both mineral prospecting right and mining right are property rights. The entity that owns mineral prospecting right is entitled to have priority in obtaining the mining right within the area of its prospecting operations, and may transfer its mineral prospecting right after obtaining approval from the relevant authorities on the grounds of merger or split of enterprises, joint venture, cooperative operation or disposal of assets or other circumstances arising from a change in ownership of real properties. The entity that owns mineral prospecting right may transfer such immediately after completing the minimum investment in prospecting and obtaining the approval from the relevant authorities. In addition to the above restriction, the owner of mineral prospecting right may transfer its right through a sale, capital injection, entering into cooperative prospecting or mining arrangements or other methods permitted by regulations. The Ministry of Land and Resources and provincial land and resources authorities are the competent approving authorities for the transfer of the mining right.

Measures for the Administration of Usage Fees and Consideration for Mineral Prospecting Right and Mining Right

Pursuant to the Measures for the Administration of Usage Fees and Consideration for Mineral Prospecting Right and Mining Right* 《探礦權採礦權使用費和價款管理辦法》( ) promulgated and implemented by the Ministry of Finance and the Ministry of Land and Resources on June 7, 1996, prospecting or mining operations of mineral resources in the territories and seas under the jurisdiction of the People’s Republic of China are required to pay usage fees and consideration for mineral prospecting right and mining right. The mineral prospecting right usage fee is charged on each of the prospecting year and payment is made annually according to the plot area of the prospecting zone at the rate of RMB100 per sq.km. per year from the first year to the third year of prospecting, with an additional charge of RMB100 per sq.km. per year from the fourth year onwards, and is capped at a maximum fee of RMB500 per sq.km. per year. The mining right usage fee is charged on annual basis depending on the area of the mining zone at the rate of RMB1,000 per sq.km per year. The consideration for mineral prospecting and mining rights is based on the assessed price confirmed by the Ministry of Land and Resources and may be paid by one-off payment or by installments; however, the payment term for prospecting right consideration must not be longer than two years at the maximum, and the payment term for mining right consideration must not be longer than six years at the maximum. The owner of mineral prospecting right and mining right shall pay the usage fees and consideration of mineral prospecting right and mining right directly into the “special account for usage fees and consideration of mineral prospecting right and mining right” opened by the finance authority of equivalent level when completing prospecting or mining registration or annual review. The owner of mineral prospecting right and mining right shall complete the registration procedures at the registration administrative authority by presenting the payment receipt issued by the bank to obtain the “special receipt for usage fees and consideration for mineral prospecting right and mining right” and the prospecting and mining licenses.

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Provisions on Administration of Collection of Mineral Resources Compensation Fees

Pursuant to the Provisions on Administration of Collection of Mineral Resources Compensation Fees* 《礦產資源補償費徵收管理規定》( ) promulgated by the State Council on February 27, 1994 and came into effect on April 1, 1994, which was subsequently amended and came into effect on July 3, 1997, the mineral resources compensation fees are charged as a certain percentage of the sales revenue from mineral products. The mineral resources compensation fees are calculated and collected jointly by the Ministry of Land and Resources and the finance authority according to the aforesaid clause.

Under specific circumstances, certain persons may reduce or exempt from the payment of mineral resources compensation fees after joint approval from the Ministry of Land and Resources and the finance authority is obtained. If the reduced mineral resources compensation fees exceed the original amount of mineral resources compensation fees by more than 50%, approval from the People’s Government at the provincial level must be obtained. Payer of mineral resources compensation fees who has obtained approval for reduced payment must complete filing with the Ministry of Land and Resources and the Ministry of Finance.

Land Rehabilitation

Pursuant to the Regulations on Land Rehabilitation * 《土地復墾條例》( ) promulgated by the State Council and became effective on March 5, 2011, for the land destroyed by production and construction activities, the production and construction entities or individuals (the “Land Rehabilitation Obligors”) shall be responsible for the rehabilitation in accordance with the principle of “He who destroys shall rehabilitate.” The Land Rehabilitation Obligors shall be responsible for the rehabilitation of the land destroyed by open-pit mining, firing bricks and tiles, digging sand and taking soil and other excavation on the earth’s surface. The Land Rehabilitation Obligors shall also carry out their land rehabilitation work in accordance with their rehabilitation plans. Where the Land Rehabilitation Obligors fail to rehabilitate the land or their rectifications remain unqualified during the land rehabilitation inspection, they will be required to pay the land rehabilitation costs to the relevant government authorities of land and resources to rehabilitate the land on their behalf.

Pursuant to the Notice of Reinforcing the Management on the Land Rehabilitation of Production and Construction Projects * 《關於加強生產建設項目土地復墾管理工作的通知》( ) jointly promulgated by the Ministry of Land and Resources, the NDRC, the Ministry of Finance, the Ministry of Railways, the Ministry of Transport, the Ministry of Water Resources and the State Environmental Protection Administration, which came into effect on September 30, 2006, the entities or individuals that are engaged in production and construction activities which destroy the land, such as mining mineral resources, firing bricks and tiles, coal-fired power generation, building roads and railways and constructing water conservation facilities, are the legal obligors for the land rehabilitation, and they must assume the rehabilitation responsibilities and obligations for the destroyed land.

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APPLICABLE LAWS AND REGULATIONS

Pursuant to the Notice of Relevant Issues on Organizing the Preparation and Review of the Land Rehabilitation Plans* 《關於組織土地復墾方案編報和審查有關問題的通知》( ) promulgated by the Ministry of Land and Resources, which came into effect on April 6, 2007 for the production and construction projects (production projects means mining mineral resources, firing bricks and tiles and other projects, while construction projects means those projects involving transport, water conservation and energy) which may destroy or have destroyed the land due to improper excavation, collapse, occupation, pollution and other reasons, the Land Rehabilitation Obligors shall prepare the land rehabilitation plans. Each relevant administration authority of land and resources shall strictly review such land rehabilitation plans in the following aspects: whether the plans have been inspected by the experts, whether they have passed the inspection, and whether the plans have been revised based on the opinions during the inspection. If they fail to meet the requirements, the relevant authorities shall not approve the construction land, grant mining licenses or pass the annual inspection.

Pursuant to the Measures for the Implementation of the Regulations on Land Rehabilitation* (《土地復墾條例實施辦法》) promulgated by the Ministry of Land and Resources on December 27, 2012, which came into effect on March 1, 2013 when the Land Rehabilitation Obligors apply for new construction land, new mining licenses or for the renewal, change and cancellation of their mining licenses, they shall provide the land rehabilitation project inspection acceptance confirmation for the completed project or the payment receipts of land rehabilitation costs. If they fail to provide such materials, the relevant competent authorities of land and resources shall not pass the review or complete relevant procedures.

Environmental Protection Relating to the Mining Industry

Pursuant to the Mineral Resources Law of the People’s Republic of China* 《中華人民共和國( 礦產資源法》) promulgated by the Standing Committee of the National People’s Congress and came into effect on October 1, 1986 and amended on August 29, 1996, when mining mineral resources, the mining entities or individuals must observe the legal provisions on environmental protection to prevent pollution of the environment.

Pursuant to the Rules for the Implementation of the Mineral Resources Law of the People’s Republic of China* 《中華人民共和國礦產資源法實施細則》( ) promulgated by the State Council, which came into effect on March 26, 1994, the owners of the mining rights shall comply with national laws and regulations relating to labor safety, soil and land conservation, land rehabilitation and environment protection.

Taxation relating to the Mining Industry

Pursuant to the Provisional Regulations on Resource Tax of the People’s Republic of China* 《中華人民共和國資源稅暫行條例》( ) and its implementation rules promulgated by the State Council on December 25, 1993, which came into effect on January 1, 1994 and was subsequently amended on September 30, 2011, entities and individuals who engage in the production of mineral products in the territories and ocean areas under the jurisdiction of China are required to pay resource tax.

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APPLICABLE LAWS AND REGULATIONS

Mine Safety

Pursuant to the Mine Safety Law of the People’s Republic of China 《中華人民共和國礦山安( 全法》) promulgated by the Standing Committee of the National People’s Congress on November 7, 1992, which came into effect on May 1, 1993 and was amended subsequently on August 27, 2009, and the Regulations for the Implementation of the Mine Safety Law of the People’s Republic of China (《中華人民共和國礦山安全法實施條例》) promulgated by the State Council and came into effect on October 30, 1996, mining enterprises must have protective facilities to ensure safe production, establish a sound safety management system, adopt effective measures to improve the working conditions of employees, and reinforce the mine safety management work to ensure safe production. The labor administrative authority of the State Council exercised unified supervision over the mine safety work at the national level, the labor administrative authorities of the local people’s government at various levels above the county level exercised unified supervision over the mine safety work within the local administrative areas, and the competent authority for administration of mining enterprises in the people’s government above the county level oversees management of mine safety work. The design documentation for mine construction project must comply with the mine safety standards and industry technical specifications, and the approval from the competent authority for administration of mining enterprises according to national requirements must be obtained. Before commencement of operation or utilization, approval and acceptance inspection on the safety facilities for mine construction project must be conducted according to the relevant laws and regulations, and operation or utilization may only commence after passing the acceptance inspection. Any behavior contravening against the above requirements may be subject to fines, suspension of mining license or operation license or other penalties.

Pursuant to the Regulations on Safe Production License* 《安全生產許可證條例》( ) promulgated by the State Council, which came into effect on January 13, 2004 and was subsequently amended and came into effect on July 18, 2013, the safety license system was implemented for mining enterprises by the State, mining enterprises without safety licenses are prohibited from engaging in production activities.

A mining enterprise must comply with the safe production requirements in order to obtain a safe production license. The administrative authority for the issuance of safe production license will grant a safe production license to an enterprise which has complied with the safe production requirements in accordance with the relevant provisions. The safe production license requires renewal every three years, and an application for renewal must be made to the administrative authority for issuing safe production license three months prior to the expiration of the validity period of the safe production license.

Regulations relating to Industry with Foreign Investments

Pursuant to the Catalogue of Industries for Foreign Investments (2015 Amendment)* 《外商投( 資產業目錄(2015年修訂)》) promulgated by the NDRC and the Ministry of Commerce on March 10, 2015 and came into effect on April 10, 2015, foreign investments in various industries are classified into three categories: Encouraged, restricted and prohibited. Foreign investments which are not under these three categories will be classified as permitted. Encouraged foreign investment will receive

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APPLICABLE LAWS AND REGULATIONS

certain benefits and incentives from the government. Restricted foreign investment must comply with the applicable restriction under PRC laws. Prohibited foreign investment refers to industries in which foreign investments are not allowed. The industry in which our Company operates is under the permitted category of industries for foreign investment.

Laws and Regulations Relating to Environmental Protection

Pursuant to the Environmental Protection Law of the People’s Republic of China* 《中華人民( 共和國環境保護法》) (“Environmental Protection Law”) promulgated by the Standing Committee of the National People’s Congress on December 26, 1989, amended on April 24, 2014 and came into effect on January 1, 2015, the Ministry of Environmental Protection of the People’s Republic of China and other local authorities exercise supervisory management over the said environmental protection work. Construction projects with environmental impact shall be subject to environment impact assessments according to the laws, construction projects without undergoing assessment for environmental impact according to the laws cannot commence construction. Facilities for the prevention and control of pollution in the construction project shall be designed, constructed and operated at the same time with the main structure construction work. Facilities for prevention and control of pollution shall comply with the requirements stated on the environmental impact assessment documentation and must not be removed or being idle without authorization.

Pursuant to the Law on Environmental Impact Assessment of the People’s Republic of China 《中華人民共和國環境影響評價法》( ) promulgated by the Standing Committee of the National People’s Congress on October 28, 2002 and came into effect on September 1, 2003, and the Regulations on the Administration of Environmental Protection in Construction Projects 《建設項目( 環境保護管理條例》) promulgated by the State Council and came into effect on November 29, 1998, the construction unit is required to submit an environmental impact assessment report to the relevant administrative authority for environmental protection, stating the potential impact on the environment by the planned construction project and the precautions or strategies and measures adopted for reducing unfavorable environmental impact. The relevant project may commence construction only after the approval for the environmental impact assessment report has been obtained. If environmental protection facilities have not been constructed or have not attained the relevant environmental protection standards, the environmental protection authority may order the suspension of such project and impose fines.

Pursuant to the Law on Prevention and Control of Water Pollution of the People’s Republic of China 《中華人民共和國水污染防治法》( ) promulgated by the Standing Committee of the National People’s Congress on May 11, 1984 and amended on May 15, 1996 and February 28, 2008, the Law on Prevention and Control of Atmospheric Pollution of the People’s Republic of China 《中華人民( 共和國大氣污染防治法》) promulgated by the Standing Committee of the National People’s Congress on September 5, 1987 and amended on August 29, 1995 and April 29, 2000, and the Law on Prevention and Control of Environmental Pollution by Solid Wastes of the People’s Republic of China* 《中華( 人民共和國固體廢物污染環境防治法》) promulgated by the Standing Committee of the National People’s Congress on October 30, 1995 and amended on December 29, 2004 and June 29, 2013, any company or enterprise causing environmental pollution and discharge of pollutants hazardous to the public must implement environmental protection measures and processes in its operation, it shall make an application to the environmental protection administrative authority and submit a plan on the

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APPLICABLE LAWS AND REGULATIONS

category and volume of liquid, gas and solid wastes to be discharged, the manner of discharge and disposal, and information on the relevant industrial noises and other related matters. If the pollutants discharged exceed the national or local standard, a pollutant discharge fee shall be paid and such company or enterprise shall be held responsible for controlling the pollutants, otherwise a fine may be imposed.

Laws and Regulations Relating to Product Liability and Protection of Consumers’ Interest

Pursuant to the Product Quality Law of the People’s Republic of China 《中華人民共和國產品( 質量法》) promulgated by the Standing Committee of the National People’s Congress on February 22, 1993, came into effect on September 1, 1993, and amended on July 8, 2000 and August 27, 2009, and the Regulations on the Liability for Industrial Product Quality 《工業產品品質責任條例》( ) promulgated by the State Council in 1986 and came into effect on July 1, 1986, producers and vendors shall establish a sound internal product quality management system to strictly implement job position quality standards, liability for quality and the corresponding appraisal methods, and prohibit forgery or faking of quality logos such as certification logos; prohibit the forgery or faking of the place of origin of the products, forgery or faking of others’ plant names or plant addresses; prohibit the mixing with inferior or faked products in production and sales by replacing genuine products with fake products and replacing good products by inferior products. Any contravention against the aforesaid requirements will be liable legally and subject to a suspension order on production and sales, forfeiture of products produced or sold illegally, forfeiture of unlawful gains, revocation of business license. Serious offences may be prosecuted for criminal liabilities according to the laws.

Pursuant to the Regulations on Certification and Authorization in the People’s Republic of China* 《中華人民共和國認證認可條例》( ) promulgated by the State Council on September 2, 2003 and came into effect on November 1, 2003, the regulatory and administrative authority for certification and authorization under the State Council shall publish a uniform product catalogue for products which must obtain certification, unify the compulsory requirements, standards and procedures for qualifying assessments in technical specifications, and unify the logos.

Pursuant to the Law on Protection of Consumers’ Interest of the People’s Republic of China* 《中華人民共和國消費者權益保護法》( ) promulgated by the Standing Committee of the National People’s Congress on October 31, 1993, came into effect on January 1, 1994 and amended on August 27, 2009 and December 25, 2013, the lawful interest of consumers are protected by the State from infringement and harm. The State has adopted measures to protect the consumers in exercising their lawful rights and safeguard the lawful interest of consumers. Operators shall warrant that commodities or services supplied by them are in compliance with the requirements of ensuring safety to human body and property. Operators who contravene against the aforesaid laws shall be liable to the corresponding civil liabilities in compensation and damages, serious offences may be prosecuted for criminal liabilities.

Pursuant to the Law of Torts of the People’s Republic of China* 《中華人民共和國侵權責任法》( ) promulgated by the Standing Committee of the National People’s Congress on December 26, 2009 and came into effect on July 1, 2010, if defective products have caused harm and injuries to other persons, the producer shall be responsible for liabilities in torts. If the defect in the product is a result of the error of the vendor and such defect has caused harm to other persons, the vendor shall be held liable

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APPLICABLE LAWS AND REGULATIONS

to tortious actions. If harm is done by a defective product, the victim may claim for damages against the producer of the product and may also claim for damages against the vendor of the product. For products which have been discovered to contain defects after they are marketed, the producer or vendor shall adopt remedial measures timely, such as giving caution notice or recall the products. If injury or harm is resulted due to remedial measures have not been adopted timely or implemented properly, tortious liabilities shall be borne. If the defective product is produced or sold with knowledge on the existence of defects and cause death or serious harm to the health of other persons, the victims are entitled to claim for punitive damages.

Laws and Regulations Relating to Intellectual Property Rights

Trademark

Pursuant to the Trademark Law of the People’s Republic of China 《中華人民共和國商標法》( ) promulgated by the Standing Committee of the National People’s Congress on August 23, 1982, which came into effect on March 1, 1983, and was subsequently amended on February 22, 1993, October 27, 2001 and August 30, 2013, and the Regulations for the Implementation of the Trademark Law of the People’s Republic of China 《中華人民共和國商標法實施條例》( ) promulgated by the State Council on August 3, 2002, which came into effect on September 15, 2002 and was subsequently amended on April 29, 2014 and came into effect on May 1, 2014, the valid period for a registered trademark is 10 years commencing from the date of registration. Upon expiry of the validity period of registered trademarks, if continuous usage is required, an application for renewal shall be made within 12 months prior to the expiry date in accordance with the provisions. If the procedure is unable to be completed within this period, an extension for six months may be granted. Each renewal of registration is valid for a term of 10 years commencing from the expiry date of the previous term of the trademark. The administrative authority for industry and commerce is empowered to investigate and handle any behavior contravening the exclusive right of registered trademark in accordance with the laws. Criminal offences shall be transferred timely to judicial authorities for handling.

Patent

Pursuant to the Patent Law of the People’s Republic of China 《中華人民共和國專利法》( ) promulgated by the Standing Committee of the National People’s Congress on March 12, 1984, came into effect on April 1, 1985, and amended on September 4, 1992, August 25, 2000 and December 27, 2008, and the Rules for the Implementation of the Patent Law of the People’s Republic of China 《中華人民共和國專利法實施細則》( ) promulgated by the State Council on June 15, 2001, which came into effect on July 1, 2001 and was subsequently amended on December 28, 2002 and January 9, 2010, the patents in China include three categories, namely, invention patent, utility model and design patent. Invention patent refers to the new technical solution proposed in respect of the product, method or its improvement; utility model refers to the new technical solution which is practicable for application and proposed in respect of the shape, structure or a combination of both of the product; and design patent refers to a new design of a certain product in shape, pattern or a combination of both and in color, shape and pattern combinations aesthetically suitable for industrial application. The invention patent has a valid term of 20 years, utility model and design patent each

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APPLICABLE LAWS AND REGULATIONS

has a term of 10 years, all of which are calculated from the date of application. Unauthorized use of patents without consent from owners of patents, forgery of the patents belonging to other persons, or engaging in other infringement acts against patent rights, will be liable to tortious liabilities. Serious offences may be prosecuted for criminal liabilities.

Laws and Regulations Relating to Labor Services, Social Insurance and Safe Production

Pursuant to the Labor Law of the People’s Republic of China 《中華人民共和國勞動法》( ) promulgated by the Standing Committee of the National People’s Congress on July 5, 1994, came into effect on January 1, 1995, and subsequently amended on August 27, 2009, and the Labor Contract Law of the People’s Republic of China 《中華人民共和國勞動合同法》( ) promulgated on June 29, 2007, which came into effect on January 1, 2008 and was subsequently amended on December 28, 2012 and came into effect on July 1, 2013, and the Regulations for the Implementation of Labor Contract Law of the People’s Republic of China* 《中華人民共和國勞動合同法實施條例( )》 promulgated by the State Council and came into effect on September 18, 2008, the employers must establish and improve the safety and sanitary system in working premises, strictly comply with all national rules and standards with respect to safety and sanitation in working premises, and provide education on safety and sanitation of working premises to employees. The safety and sanitation facilities in working premises must comply with national standards formulated by the State. Employers must provide employees with working premises in a safe and sanitary environment in compliance with the national requirements and relevant labor protective rules. If a labor relationship will be or has been established between the employer and employee, they should enter into a labor contract in writing. Enterprise and entity must not force employees to work over-time, the employer shall pay overtime wages to employees in accordance with national laws and regulations. The wages paid by the employer must not be lower than the local minimum wage level and shall be paid to the employees on timely basis.

Pursuant to the Safe Production Law of the People’s Republic of China 《中華人民共和國安全( 生產法》) (“Safe Production Law”) promulgated by the Standing Committee of the National People’s Congress on June 29, 2002, which came into effect on November 1, 2002 and was subsequently amended on August 27, 2009, and the Law on Prevention and Control of Occupational Disease of the People’s Republic of China 《中華人民共和國職業病防治法》( ) promulgated on October 27, 2001, which came into effect on May 1, 2002 and was subsequently amended on December 31, 2011, the producers shall satisfy the safe production conditions as required under the Safe Production Law and other relevant laws, administrative regulations and national standards or industry standards. Producers who fail to satisfy the safe production conditions are prohibited from engaging in production operational activities or may be subject to punishment in the form of fines or other penalties. Producers shall provide employees with education and training program on safe production. In addition, producers may also provide employees with protective gears in compliance with national standards or industry standards for rendering services, and supervise and educate the employees to use such protective gears in accordance with the relevant usage rules. Producers who fail to satisfy the requirements of the relevant laws and regulations are prohibited from commencing production activities or may be subject to punishment in the form of fines or other penalties.

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APPLICABLE LAWS AND REGULATIONS

Pursuant to the Social Insurance Law of the People’s Republic of China* 《中華人民共和國社( 會保險法》) promulgated by the Standing Committee of the National People’s Congress on October 28, 2010 and came into effect on July 1, 2011 and other relevant laws and regulations of the PRC, the employers must complete social insurance registration with the social insurance agency and register social insurance for employees in accordance with the laws, including basic retirement insurance, basic medical insurance, unemployment insurance, maternity insurance and work injury insurance. The social insurance fees payable by employees will be paid on their behalf by employers, those employers who fail to pay social insurance fees for employees will be subject to punishment in the form of fines or other penalties.

Pursuant to the Regulations for the Administration of Housing Provident Fund* 《住房公積金管( 理條例》) promulgated by the State Council, which came into effect on April 3, 1999 and was subsequently amended on March 24, 2002, the employer must complete the provident fund registration with the local housing provident fund administration center and make contributions to the housing provident fund for employees by paying into the special housing provident fund account set up by the entrusted bank. Both the employer and employees must make contributions to the housing provident fund at the ratio of not less than 5% of the average monthly salary of the employees in the previous year.

APPLICABLE VIETNAM LAWS AND REGULATIONS

Foreign Investment

In general, foreign investors are encouraged to invest into Vietnam and are subject to equal treatment with domestic investors in establishing a company other than in conditional or restricted business areas. Foreign investment shall be mainly governed by the Law on Investment No.67/2014/QH13 (the “Law on Investment”) and the Law on Enterprises No. 68/2014/QH13 (the “Law on Enterprises”) passed by the National Assembly of Vietnam on November 26, 2014, which became effective as of and from July 1, 2015.

The Law on Investment provides for a list of six restricted business areas and a list of 267 conditional sectors which may only be amended from time to time by the National Assembly or the government of Vietnam, respectively. Currently, manufacture of PV glass products is not named in those lists and there is no prohibition or restriction under the Law on Investment.

Depending on its business nature, investment scale (i.e., investment capital of VND5,000 billion), land use demand (i.e., leasing directly from the state), and/or technologies use (i.e, technologies to be used fall within the list of technologies of which transfer is restricted under the law on technologies transfer); the foreign investment project may be subject to the so called “in-principle approval” by the National Assembly of Vietnam, the Prime Minister of Vietnam or the People Committee of the local province in Vietnam, as the case may be. A foreign-invested company would be set up under the following legal forms, namely, limited liability companies, joint stock companies (akin to shareholding companies), partnerships and private enterprises. In the Vietnamese market, limited liability companies and joint stock companies are the most favorite corporate forms selected by foreign investors.

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APPLICABLE LAWS AND REGULATIONS

Under the Law on Investment, investment incentives would be granted in various circumstances, such as:

investment projects in the preferential investment industries and trades. For example, high-tech activities, production of new materials, and production of products with an added value of 30% or more and energy-saving products;
investment projects located in preferential investment geographical areas. For example, areas with difficult/especially-difficult socio-economic conditions, industrial zones, export processing zones, high-tech zones and economic zones;
projects with a scale of capital of VND6,000 billion (approximately US$300 million) or more of which at least VND6,000 billion is disbursed for a period of three years from the date of issuance of the Investment Registration Certificate or the date of the so-called “in-principle approval”;
investment projects located in rural areas and employing 500 employees or more; and
high-tech enterprises and scientific and technological enterprises.

The government of Vietnam is authorized to specify the above-mentioned preferential investment industries, trades and geographical areas.

A foreign investor investing in Vietnam is required to obtain an investment registration certificate for its investment project under the Law on Investment, and then the foreign investor shall also apply for an enterprise registration certificate for incorporation of the foreign-invested enterprise under the Law on Enterprises in Vietnam. The foreign-invested enterprise is required to obtain various licences, permits and approvals for implementation of its businesses under the Vietnam laws (e.g., construction permit and environment-protection permits).

Environmental Protection

The foreign-invested enterprise is required to comply with various environmental protection provisions. For instance, depending on the nature of its business, the following permits or approvals must be obtained, such as: (i) the approval of the environmental impact assessment report (i.e., manufacturing electric equipment at annual capacity of 500 tons or more, production of batteries at the annual capacity of 100 tons or more or 50,000 kilowatt-hour); (ii) the certificate on the completion of environmental protection works and measures; (iii) the permit for exploiting and utilizing fresh water (surface water and underground water as the case maybe); (iv) the permit for discharging waste-water into water sources; (v) registration of the generator of hazardous materials (if any) with the local Department of Natural Resources and Environment in Vietnam; (vi) registration of the generator of industrial gaseous emission with the relevant government body in Vietnam; and (vii) the license for the industrial gaseous emission.

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APPLICABLE LAWS AND REGULATIONS

Land

Foreign-invested enterprises may lease land site in an industrial zone from relevant developers. Alternatively, they may apply for leasing land directly from the State of Vietnam for a term of not more than 50 years. In special circumstances, the lease term may be 70 years.

Import/Export

Import/export activities of foreign-invested enterprises shall be mainly governed by the Commercial Law, Decree 187/2013/ND-CP dated November 20, 2013 of the government of Vietnam(“Decree 187”) and implementation regulations thereunder. Decree 187 sets forth, among other things, a list of export-prohibited goods and a list of goods which are subject to export licences to be issued by the relevant government bodies. For instance, goods of which export being imposed upon quotas set by the relevant foreign countries (in accordance with bilateral treaties with Vietnam) and goods of which export being subject to management as required by international treaties (to which Vietnam is a signing party) shall be subject to export licences to be granted by the Ministry of Industry and Trade in Vietnam. Currently, PV glass products are not named in those lists and there is no prohibition or restriction applicable to export of PV glass products.

Foreign Exchange

Following the movement in Vietnam to combat inflation and the so-called “dollarization of the economy,” the Ordinance No. 06/2013/UBTVQH13 passed by the Standing Committee of the National Assembly of Vietnam (amending Ordinance No. 28/2005/PL-UBTBQH11 dated December 13, 2005) provides for stringent provisions on foreign exchange management. Particularly, within the territory of Vietnam, all transactions, payments, listings, advertisements, quotations, setting prices, and recording prices in contracts and agreements and other similar forms of resident and non-resident transactions shall not be effected in foreign exchange except for cases permitted by the State Bank of Vietnam. The State Bank of Vietnam under Circular No. 32/2013/TT-NHNN dated December 26, 2013 (as amended by Circular No. 16/2015/TT-NHNN dated October 19, 2015) specifies 17 cases where the use of foreign currency in Vietnam is permitted, including:

banks, non-banking credit institutions, and branches of foreign banks and other organizations authorized to conduct foreign exchange business and provide foreign exchange services are permitted use foreign exchange within the scope as provided by the State Bank of Vietnam. Examples of foreign exchange services include transact, make payments, list, advertise, quote, set prices and record prices in contracts and agreements;
• an institutional resident having legal entity status is permitted to transfer capital internally by foreign currency remittances as between the account of such institutional resident and accounts of its subsidiary entities without legal entity status, and vice versa;
residents are permitted to contribute capital in foreign currency remittances in order to implement a foreign investment project in Vietnam;

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APPLICABLE LAWS AND REGULATIONS

residents being domestic or foreign contractors are permitted as follows: (i) with regard to foreign expenses relevant to implementation of a tender package via international tendering in accordance with the Law on Tendering in Vietnam, tenderers are permitted to submit their tenders in foreign currency and to receive payment in foreign currency remittances from the investor or head contractor in order to make payments and disbursements and to remit money overseas; and (ii) with respect to implementation of tender packages in accordance with the law on petroleum, tenderers are permitted to submit their tenders in foreign currency and to receive payment in foreign currency remittances from the investor or head contractor in order to make payments and disbursements and to remit money overseas;
institutional residents conducting business in the aviation transport, hotel and tourism sectors are permitted to list and advertise prices of goods and services in Vietnamese dong and the equivalent foreign currency amounts on websites and in specialized publications (excluding menus and service price lists) in foreign languages; and
residents and non-resident institutions are permitted to nominate and pay salaries, bonuses and/or allowances in foreign currency remittances or cash to foreign staff, whether or not they are residents of Vietnam.

Under the Ordinance on Foreign Currency (Ordinance No.28/2005/PL-UBTBQH11 as amended by Ordinance No.06/2013/UBTVQH13), the foreign-invested company must open a direct investment capital account at an authorized credit institution in Vietnam. The contribution by foreign investors of investment capital into Vietnam and remittance of profit out of Vietnam shall be implemented via such direct investment account. After fully discharging financial obligations to the State of Vietnam (e.g. tax obligations), foreign investors are permitted under the Law on Investment to remit abroad income/profit derived from their business investment activities of in Vietnam (e.g. investment in a foreign-invested company in Vietnam).

Under the Ordinance on Foreign Currency, a foreign-invested company is permitted to purchase foreign currency at authorized credit institutions in Vietnam (i.e., commercial banks) for payment of imported goods/services. A company must remit all foreign currency amounts derived from export of goods/services into a foreign currency account opened at an authorized credit institutions in Vietnam. If such company wish to retain foreign currency overseas, it must obtain approval from the State Bank of Vietnam. “Residents” in this context refers to, among others, local Vietnamese individuals, and domestic and foreign-invested companies established in Vietnam.

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HISTORY AND CORPORATE STRUCTURE

INTRODUCTION

Our Company, previously known as Zhejiang Flat Glass & Mirror Co., Ltd. (浙江福萊特玻璃鏡業股份有限公司) and Flat Solar Glass Group Co., Ltd. (福萊特光伏玻璃集團股份有限公司), was converted from Zhejiang Flat Glass & Mirror Ltd. (浙江福萊特玻璃鏡業有限公司, which was originally named as Jiaxing City Naibang Trading Co., Ltd. (嘉興市耐邦經貿有限公司) (“Naibang Trading”)), a limited liability company, into a joint stock limited company pursuant to the PRC Company Law on December 29, 2005.

Our history can be traced back to 1998 when Naibang Trading, the predecessor of our Company, was established and commenced the sales of, among other things, glass products. Our Company is currently primarily engaged in the business of designing and developing, producing and selling PV glass products, which are sold to PV module manufacturers in China and overseas. Our PV glass products are primarily used to manufacture c-Si PV cells, which can then be assembled to form c-Si PV modules (also known as c-Si PV panels). Our PV glass can also be used as covers for thin film PV cells.

BUSINESS MILESTONES

The table below sets out the key milestones in the development of our business:

Date June 1998 . . . . . . November 2000 . . October 2002 . . . . December 2005 . . June 2006 . . . . . . October 2006 . . . . August 2007 . . . .	Event
	Naibang Trading, the predecessor of our Company, was established and engaged in the sales of, among other things, glass products. We expanded our business to the processing of glass products, such as silver mirrors. We commenced manufacturing tempered glass. Our Company was converted from a limited liability company to a joint stock limited company. Shanghai Flat, our wholly-owned subsidiary, was established when our Company acquired one furnace from a third party with a daily maximum production capacity of 100 tons, subsequent to which our Group entered into the PV glass industry. We became one of the designated suppliers of household glass products of a large multinational furniture retailer that designs and sells ready-to-assemble furniture, appliances and home accessories. Zhejiang Jiafu, our then indirectly wholly-owned subsidiary, was established with a view to further expand our scale of production of PV glass.

Date
June 1998 . . . . . .
November 2000 . .
October 2002 . . . .
December 2005 . .
June 2006 . . . . . .
October 2006 . . . .
August 2007 . . . .

Event

Naibang Trading, the predecessor of our Company, was established and
engaged in the sales of, among other things, glass products.
We expanded our business to the processing of glass products, such as
silver mirrors.
We commenced manufacturing tempered glass.
Our Company was converted from a limited liability company to a joint
stock limited company.
Shanghai Flat, our wholly-owned subsidiary, was established when our
Company acquired one furnace from a third party with a daily maximum
production capacity of 100 tons, subsequent to which our Group entered
into the PV glass industry.
We became one of the designated suppliers of household glass products
of
a
large
multinational
furniture
retailer
that
designs
and
sells
ready-to-assemble furniture, appliances and home accessories.
Zhejiang
Jiafu,
our
then
indirectly
wholly-owned
subsidiary,
was
established with a view to further expand our scale of production of PV
glass.

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	HISTORY AND CORPORATE STRUCTURE	HISTORY AND CORPORATE STRUCTURE
	Date June 2009 . . . . . . July 2010 . . . . . . . October 2011 . . . . May 2012 . . . . . . August 2012 . . . . October 2012 . . . . December 2012 . . May 2013 . . . . . . June and December 2014. October 2014 . . . .	Event
		The PV glass production capacity of our Group was further increased as two furnaces at the production facilities of Zhejiang Jiafu, each with a daily maximum production capacity of 300 tons, were both completed and put into operation. Our Group’s daily melting capacity for PV glass exceeded 1,290 tons upon completion of the construction of the glass processing facilities phase II of Zhejiang Jiafu. Our Company’s first float glass melting furnace with a daily maximum production capacity of 600 tons was put into operation. Our Company’s first 600 tons PV glass furnace commenced operation. Anhui Flat Materials obtained the extraction right to the Mine through open bid. Our Company’s first Low-E glass processing line was completed with an annual processing capacity of 5.8 million square meters, and commercial production commenced in late 2012. Our Company’s second float glass furnace was put into operation and our Group’s daily maximum production capacity of float glass was increased to 1,200 tons. Our Company’s second PV glass furnace with a daily capacity of 600 tons was put into operation, increasing our Group’s daily capacity of PV glass to 2,290 tons by November 2013. Our Company’s distributed PV systems phase I (with a capacity of approximate 8.4 MW) and phase II (with a capacity of approximate 1.9 MW) were put into operation and connected to the electricity grid in June and December 2014, respectively, bringing our Group’s distributed PV systems electricity generation capacity to approximate 10.3 MW. Our Company introduced a full set of internationally leading, fully-automatic and continuous glass processing system.

For further information about the awards and accreditations obtained by our Group, please see the section headed “Business — Awards, Accreditations and Memberships” in this document.

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HISTORY AND CORPORATE STRUCTURE

OUR COMPANY

1. Establishment and Conversion from a Limited Liability Company to a Joint Stock Limited Company

Our predecessor, Naibang Trading, a limited liability company, was established in the PRC on June 24, 1998, with a total registered capital of RMB510,000 contributed by our Founders in cash with their respective own capital. Further details of our Founders are set out in the paragraph headed “Our Founders” below.

In November 2001, Naibang Trading changed its name to Zhejiang Flat Glass & Mirror Ltd. (浙江福萊特玻璃鏡業有限公司). On December 29, 2005, Zhejiang Flat Glass & Mirror Ltd. (浙江福萊特玻璃鏡業有限公司) was converted to a joint stock limited company under the name of Zhejiang Flat Glass & Mirror Co., Ltd.* (浙江福萊特玻璃鏡業股份有限公司), with a registered capital of RMB70,000,000, divided into 70,000,000 Domestic Shares with a par value of RMB1.00 each, of which 68,400,000 Domestic Shares were subscribed for by our Promoters at an aggregate consideration of RMB68,400,000, which was contributed to our Company by the appraised net assets of our predecessor, and the remaining 1,600,000 Domestic Shares were subscribed by Ms. Ruan Zeyun, for a cash consideration of RMB1,600,000, which was fully paid in November 2005.

2. Changes in Registered Capital and Transfer of Shares during the Track Record Period

As of the Latest Practicable Date, the registered capital of our Company was RMB337,500,000, divided by 337,500,000 Domestic Shares with a par value of RMB1.00 each.

From the date of our conversion from a limited liability company to a joint stock limited company on December 29, 2005, to the divestment of our Financial Investors (as detailed below) in our Company on May 30, 2014, the registered capital of our Company has been increased several times mainly as a result of (i) the issuance of new Domestic Shares; (ii) the merger by absorption of a company where our shares were used as considerations; (iii) the conversion of undistributed profits; (iv) conversion of capital reserve; and (v) the investments by our Financial Investors (as described below).

On May 30, 2014, the registered capital of our Company was reduced from RMB359,400,000 to RMB337,500,000 by the reduction of 21,900,000 Domestic Shares with a par value of RMB1.00 each, which amounted to approximate 6.09% of the then registered capital of our Company, by way of our Company’s repurchase and cancellation of the Domestic Shares held by our Financial Investors.

For details of the transfer of shares of our Company, please refer to the paragraph headed “1. Further Information about Our Company — B. Changes in share capital and transfer of shares” in the section headed “Appendix VII — Statutory and General Information” in this document.

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HISTORY AND CORPORATE STRUCTURE

3. Investments and Exit by our Financial Investors

On December 20, 2010, a capital increase agreement was entered into among our Financial Investors, namely, Primemont Capital, Boxin Preferred, Guoyuan Investment and Boxin Growth, and our Company.

Background of the Financial Investors

Primemont Capital is a limited liability company established under the laws of the PRC on April 8, 2010 and was held, as at May 30, 2014, the date on which Primemont Capital ceased to be our Shareholder, by Beijing Fenghui Futong Investment Co., Ltd. (北京豐匯富通投資有限公司) and Fubang Asset Management Co., Ltd. (富邦資產管理有限公司), both being Independent Third Parties, as to 50% and 50%, respectively.

Boxin Preferred is a limited partnership established under the laws of the PRC on December 16, 2010. As at May 30, 2014, the date on which Boxin Preferred ceased to be our Shareholder, all of the 49 partners of Boxin Preferred were Independent Third Parties.

Guoyuan Investment is a limited liability company established under the laws of the PRC on August 18, 2009 and was, as at May 30, 2014, the date on which Guoyuan Investment ceased to be our Shareholder, wholly-owned by Guoyuan Securities Co., Ltd.* (國元證券股份有限公司), an Independent Third Party.

Boxin Growth is a limited partnership established under the laws of the PRC on July 30, 2010. As at May 30, 2014, the date on which Boxin Growth ceased to be our Shareholder, all of the 15 partners of Boxin Growth were Independent Third Parties.

Considerations

The considerations paid by Primemont Capital, Boxin Preferred, Guoyuan Investment and Boxin Growth were RMB140,224,000, RMB100,160,000, RMB75,120,000 and RMB50,080,000, respectively, which were determined after arms’ length negotiation between the parties and by reference to the then forecasted earnings of 2010 as agreed between the parties. These considerations were fully paid up by the Financial Investors on December 22, 2010.

Shareholding

Immediately after completion of the respective investments into our Company by the Financial Investors, Primemont Capital, Boxin Preferred, Guoyuan Investment and Boxin Growth held approximate 2.34%, 1.67%, 1.25% and 0.83% interest in our share capital, respectively.

Special Rights

No special right was granted to the Financial Investors.

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HISTORY AND CORPORATE STRUCTURE

Use of Proceeds from the Investment

The proceeds from the investments by the Financial Investors were used for (i) research and development and manufacture of PV glass; and (ii) general working capital of our Company. The proceeds from the investments by our Financial Investors have been fully utilized.

Exit of the Financial Investors

On January 1, 2014, three capital reduction agreements were entered into between our Company and (i) Primemont Capital, (ii) Boxin Preferred and Boxin Growth, and (iii) Guoyuan Investment, respectively. Pursuant to such capital reduction agreements, our Company and each of Primemont Capital, Boxin Preferred, Guoyuan Investment and Boxin Growth agreed to reduce and cancel an aggregate of 21,900,000 Domestic Shares of our Company, for considerations of RMB161,257,600, RMB115,184,000, RMB86,388,000 and RMB57,592,000 to each of them, respectively, which considerations were determined after arms’ length negotiation between the relevant parties. On May 30, 2014, an aggregate of 21,900,000 Domestic Shares of our Company were cancelled and the registered capital of our Company was reduced by RMB21,900,000. As confirmed by our PRC Legal Advisors, upon completion of the relevant filing on change of registration at competent governmental institutions on May 30, 2014, Primemont Capital, Boxin Preferred, Guoyuan Investment and Boxin Growth ceased to be Shareholders of our Company. As of the Latest Practicable Date, an aggregate of RMB417,081,300 of the considerations, which included principal and interest, were paid by our Company from internal resources of our Group. [As confirmed by our PRC Legal Advisors, the aforesaid reduction and cancellation of Domestic Shares and exit of the Financial Shareholders remain valid and effective.]

4. Acquisition of Equity Interest by Mr. Zhao Xiaofei

On April 10, 2015, Mr. Zhao Xiaofei, the spouse of Ms. Ruan Zeyun and the son-in-law of Mr. Ruan Hongliang and Ms. Jiang Jinhua, entered into an equity transfer agreement with Mr. Wang Jiahua pursuant to which Mr. Zhao Xiaofei agreed to acquire from Mr. Wang Jiahua, 0.36% equity interest in our Company for a cash consideration of RMB5.40 million, which was determined after arm’s length negotiation between parties. Such consideration was irrevocably settled on April 17, 2015 and the transfer was completed on April 23, 2015. The equity interest acquired by Mr. Zhao Xiaofei under the above-mentioned agreement does not enjoy any special rights. On the basis of [REDACTED] Domestic Shares which Mr. Zhao Xiaofei will hold immediately upon completion of the [REDACTED], representing approximately [REDACTED]% of the total share capital of our Company upon the Listing before the exercise of the [REDACTED], the investment cost of Mr. Zhao Xiaofei is approximately RMB[REDACTED] per Domestic Share, representing a discount of approximately [REDACTED]% to the high end of the indicative [REDACTED] range of HK$[REDACTED] per H Share, and a discount of approximately [REDACTED]% to the low end of the indicative [REDACTED] range of HK$[REDACTED] per H Share. The Domestic Shares held by Mr. Zhao Xiaofei are subject to lock up of twelve months from the Listing Date. The Sole Sponsor is of the view that the acquisition of interest by Mr. Zhao Xiaofei mentioned above is in compliance with the Interim Guidance on Pre-IPO Investments announced by the Stock Exchange on October 13, 2010 (as amended) and Guidance Letters HKEx-GL43-12 and HKEx-GL44-12.

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HISTORY AND CORPORATE STRUCTURE

APPLICATION FOR A-SHARE LISTING

In October 2011, our Company filed with the CSRC an application for listing its shares on the main board of the Shanghai Stock Exchange (the “A-share Application”) which was sponsored by a sponsor institution duly licensed in the PRC (the “A-share Sponsor”). The CSRC formally accepted the A-share Application for review on November 2, 2011 and we received a set of comments from the CSRC in January 2012. Such comments were related to our Company’s business, operation and financial conditions in the three years ended December 31, 2009, 2010 and 2011 (the then track record period of the A-share Application). Principal comments include requests for disclosures and/or explanations on (i) our Company’s policies and plans of dividend distribution and the A-share Sponsor’s relevant opinions and the compliance with PRC laws and regulations, (ii) the capital investments of the A-share Sponsor and other investors in our Company before the A-share Application and the compliance with the relevant PRC laws and regulations; (iii) the connected transactions and the relevant details disclosed in the draft prospectus for the purpose of the A-share Application, the business scope of the connected persons, fairness of pricing and the compliance with the applicable rules and regulations; and (iv) the pollution emitted during our production process and our Company’s environmental protection policies and measures, related costs as well as compliance with the relevant PRC laws and regulations. Our Company submitted responses (the “Responses”) to such comments in March 2012 but did not receive any further comments or enquiries from the CSRC in relation to the Responses. However, during the CSRC’s review process in 2012, the global PV glass market has experienced a significant downturn. As such, our Company made a strategic decision to concentrate on its business development and abort the A-share Application. It subsequently submitted an application to the CSRC for withdrawal of the A-share Application in March 2013 on the basis that although the business of our Company had been operated in a normal manner and achieved profits, it had been negatively influenced by the uncertainty in the down-stream PV glass market. At all material times, the A-share Application was valid and had not been rejected or returned by the CSRC. For more details of the global PV glass market in 2012, please refer to “Analysis of PV Glass Market” in the section headed “Industry Overview.”

In May 2013, the CSRC issued a notification to our Company (the “CSRC Notification”) and decided to terminate the review process of the A-share Application pursuant to the relevant requirement on the basis of the voluntary withdrawal of A-share Application by our Company. Following the withdrawal of the A-share Application, the engagement between our Company and each advisor ceased. The A-share Sponsor and the reporting accountants involved in the A-share Application have respectively confirmed that they had no disagreement with our Company or any other advisor that was involved in the A-share Application, and that there was no matter that needed to be brought to our attention with respect to the withdrawal of the A-share Application and the CSRC Notification.

Save as disclosed in this document, nothing has come to the attention of the Sole Sponsor that would reasonably make the Sole Sponsor aware of (a) any issues relating to the A-share Application which are relevant and material to the Listing and should reasonably be highlighted in this document as part of the information that investors would reasonably require in order to make an informed assessment of our Company, and (b) any other matters relating to the A-share Application which might materially and adversely affect our Company’s suitability for the Listing or the accuracy of the information disclosed in this document.

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HISTORY AND CORPORATE STRUCTURE

Having performed the necessary due diligence with respect to the A-share Application, the Sole Sponsor, itself not being licensed to advise on the A-share Application or on PRC listing matters generally, is not aware of any matters that would cause the Sole Sponsor to believe that the CSRC would have then rejected our Company’s A-share Application had our Company elected to proceed with the CSRC review process for the A-share Application with the improved global PV glass market.

OUR SUBSIDIARIES

1. Shanghai Flat

In order to utilize a glass melting furnace with a daily maximum capacity of 100 tons acquired by our Company from a third party in April 2006, Shanghai Flat was established under the laws of the PRC as a limited liability company on June 6, 2006 with a registered capital of RMB20,000,000 contributed by our Company in cash.

At the time of commencement of business in June 2006, Shanghai Flat used the above-mentioned furnace to engage in the business of production of patterned glass. Subsequently, as our Group started research and exploration in the PV glass industry and developed several important overseas customers, including a renowned Japanese multinational corporation, Shanghai Flat made certain enhancements and modifications to such furnace so that it could be used to produce PV glass, and built another furnace which can be used to produce PV glass by itself.

In May 2012, our Company’s first 600-ton PV glass melting furnace, was put into operation and replaced the two PV glass melting furnaces, each with a daily melting capacity of 100 tons operated by Shanghai Flat.

Following the current trend of the PV industry, Shanghai Flat has been gradually switching their orders of PV glass to the Company since the second half of 2011. As of the Latest Practicable Date, Shanghai Flat was mainly engaged in architectural glass processing business.

2. Zhejiang Jiafu

On August 15, 2007, Zhejiang Jiafu was established under the laws of the PRC as a limited liability company with a registered capital of RMB100,000,000 contributed by our Company and Shanghai Flat in cash as to 55% and 45%, respectively.

Zhejiang Jiafu commenced its business in January 2009, after the installation and operation of the first of its two melting furnaces with a daily maximum production capacity of 300 tons, and was mainly engaged in the manufacture and sales of PV glass.

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HISTORY AND CORPORATE STRUCTURE

Merger by Absorption of Gaoshang Real Estate and Capital Increase in 2008

Jiaxing Gaoshang Real Estate Development Co., Ltd.* (嘉興高上置業開發有限公司) (“Gaoshang Real Estate”) was established as a wholly-foreign owned company in the PRC on November 23, 2004, with registered capital of USD3,000,000. Gaoshang Real Estate was owned by Mr. Zheng Minxiong (鄭敏雄先生), Mr. Liu Qingxi (劉清溪先生) and Mr. Zheng Yaosen (鄭耀森先生) as to 38.33%, 36.67% and 25.00%, respectively, at the time of its establishment. Mr. Zheng Minxiong, Mr. Liu Qingxi and Mr. Zheng Yaosen were Independent Third Parties as of the Latest Practicable Date.

On June 30, 2008, with a view to facilitate the obtaining of a piece of land owned by Gaoshang Real Estate through acquisition of the equity interests in Gaoshang Real Estate for the construction of our office building, canteen and dormitory for our employees, two equity transfer agreements were entered into between Mr. Zheng Minxiong, Mr. Liu Qingxi and Shanghai Flat, and between Mr. Liu Qingxi, Mr. Zheng Yaosen and our Company, respectively. Pursuant to the equity transfer agreements, Mr. Zheng Minxiong and Mr. Liu Qingxi agreed to transfer and Shanghai Flat agreed to acquire 38.33% and 6.37% equity interests in Gaoshang Real Estate at consideration of RMB9,085,000 and RMB1,580,000, respectively, and Mr. Liu Qingxi and Mr. Zheng Yaosen agreed to transfer and our Company agreed to acquire 30.00% and 25.00% equity interests in Gaoshang Real Estate at the considerations of RMB7,110,000 and RMB5,925,000, respectively. Such considerations were determined with reference to the net book value of the land use rights and construction in process owned by Gaoshang Real Estate as at June 30, 2008 and were settled in full as of July 23, 2009. Immediately after the equity transfers, Gaoshang Real Estate was owned by our Company and Shanghai Flat as to 55% and 45%, respectively.

On October 15, 2008, upon resolutions passed at respective shareholders’ meetings of Gaoshang Real Estate and Zhejiang Jiafu, Gaoshang Real Estate was merged by absorption by Zhejiang Jiafu. Upon completion of such merger by absorption, the registered capital of Zhejiang Jiafu was increased from RMB100,000,000 to RMB123,714,977.05 and was owned by our Company and Shanghai Flat as to 55% and 45%, respectively.

Acquisition of 45% Equity Interests in Zhejiang Jiafu in 2014

On March 10, 2014, in the view to enhance management efficiency of our Group, an equity transfer agreement was entered into between our Company and Shanghai Flat, pursuant to which Shanghai Flat agreed to transfer and our Company agreed to acquire 45% equity interests held by Shanghai Flat in Zhejiang Jiafu at a consideration of RMB67,500,000, which was determined with reference to the then registered capital of Zhejiang Jiafu. Such consideration was offset in full by payables owed to our Company by Shanghai Flat as of June 23, 2014. Immediately upon completion of such equity transfer, Zhejiang Jiafu became wholly owned by our Company.

3. Anhui Flat Glass

On January 18, 2011, with the view to leverage on our current business presence in Anhui province and to better serve our customers located in the Northern and Western China, Anhui Flat Glass was established under the laws of the PRC as a limited liability company with registered capital

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HISTORY AND CORPORATE STRUCTURE

of RMB150,000,000 contributed by our Company and Zhejiang Jiafu as to 60% and 40%, respectively. On January 18, 2013, the registered capital of Anhui Flat Glass was decreased to RMB30,000,000. As of the Latest Practicable Date, Anhui Flat Glass had not commenced its business and we were in the process of conducting the feasibility study. The business scope of Anhui Flat Glass as set out in its business license is the manufacture, processing and sales of special glass.

Acquisition of 40% Equity Interests in Anhui Flat Glass in 2014

On March 10, 2014, in the view to enhance management efficiency of our Group, an equity transfer agreement was entered into between our Company and Zhejiang Jiafu, pursuant to which Zhejiang Jiafu agreed to transfer and our Company agreed to acquire 40% equity interests held by Zhejiang Jiafu in Anhui Flat Glass at a consideration of RMB12,000,000, which was determined with reference to the then registered capital of Anhui Flat Glass. Such consideration was offset in full by payables owed to our Company by Zhejiang Jiafu as of June 23, 2014. Immediately upon completion of such equity transfer, Anhui Flat Glass became wholly-owned by our Company.

4. Anhui Flat Materials

On January 19, 2011, with a view to further strengthen our vertical integration and leverage on the abundance of quartzite ore, which can be processed into silica sand as one of our principal raw materials in glass production, in Anhui Province, Anhui Flat Materials was established under the laws of the PRC as a limited liability company with registered capital of RMB30,000,000 contributed by our Company and Zhejiang Jiafu as to 60% and 40%, respectively. Anhui Flat Materials commenced its business in September 2013 and was principally engaged in the operations of the mine and the sales of quartzite ore.

Acquisition of 40% Equity Interests in Anhui Flat Materials in 2014

On March 10, 2014, in the view to facilitate the management of our Group, an equity transfer agreement was entered into between our Company and Zhejiang Jiafu, pursuant to which Zhejiang Jiafu agreed to transfer and our Company agreed to acquire 40% equity interests held by Zhejiang Jiafu in Anhui Flat Materials at a consideration of RMB12,000,000, which was determined with reference to the then registered capital of Anhui Flat Materials. Such consideration was offset in full by payables owed to our Company by Zhejiang Jiafu as of June 23, 2014. Immediately upon completion of such equity transfer, Anhui Flat Materials became wholly owned by our Company.

5. Zhejiang Flat

On February 14, 2011, Zhejiang Flat was established under the laws of the PRC as a limited liability company with registered capital of RMB5,000,000 contributed solely by our Company. Zhejiang Flat commenced its business in April 2012 and was mainly engaged in the manufacture and sales of architectural or household glass products.

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HISTORY AND CORPORATE STRUCTURE

6. Flat HK

On January 9, 2013, with a view to develop our international business, Flat HK was incorporated under the laws of Hong Kong as a limited company with an authorized share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. On the same day, the 10,000 shares of Flat HK were issued and allotted to our Company. Flat HK commenced its business in August 2013 and was mainly engaged in the export of glass.

On September 30, 2013, the authorized share capital of Flat HK was increased by HK$67,561 to HK$77,561 divided into 77,561 shares of HK$1.00 each. On the same day, the additional 67,561 shares of Flat HK were issued and allotted to our Company.

7. Flat New Energy

On March 11, 2014, with a view to leverage on the PRC Government’s favourable policies on solar energy and to operate our distributed PV systems, Flat New Energy was established under the laws of the PRC as a limited liability company with registered capital of RMB10,000,000 contributed solely by our Company. Flat New Energy commenced its business in March 2014 and was mainly engaged in the investment, construction, operation and maintenance of new energy power plants. As of the Latest Practicable Date, the power generation facilities operated by Flat New Energy have a total capacity of approximately 10.3 MW.

Views of Our PRC Legal Advisors

Our PRC Legal Advisors are of the view that (i) the merger by absorption and acquisitions mentioned above have been properly and legally completed and settled; (ii) the rights and obligations under the capital increase agreement entered into among the Financial Investors and our Company have been legally released; and (iii) the historical transfer of shares referred to in this section have been properly and legally completed and settled.

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HISTORY AND CORPORATE STRUCTURE

OUR FOUNDERS

The names, capital contributions made by and approximate shareholding percentages of our Founders in Naibang Trading as at the date of the establishment of Naibang Trading are set out below:

Name of Founders Mr. Ruan Hongliang (阮洪良先生) . . . . . . . . . . . . . . . . . . . . . . . . Mr. Chen Xinhua (陳新華先生) . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zou Haiming (鄒海明先生) . . . . . . . . . . . . . . . . . . . . . . . . . . Ms. Wang Huifen (王惠芬女士) . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zhu Quanming (祝全明先生) . . . . . . . . . . . . . . . . . . . . . . . . . Ms. Luo Shuying (駱淑英女士) . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Xu Lingen (徐林根先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zheng Wenrong (鄭文榮先生) . . . . . . . . . . . . . . . . . . . . . . . . Mr. Wu Herong (吳和榮先生). . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Wu Jianping (伍建平先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Shen Fuquan (沈福泉先生) . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Chen Jian (陳堅先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Wei Yezhong (魏葉忠先生) . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zhang Yongming (張永明先生) . . . . . . . . . . . . . . . . . . . . . . . Mr. Lu Peihua (陸培華先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . *TOTAL* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Capital contribution (RMB) 60,000 50,000 50,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 15,000 5,000 5,000 5,000 510,000	Approximate shareholding percentage	Approximate shareholding percentage
			(%) 11.78 9.81 9.81 7.84 7.84 7.84 7.84 7.84 7.84 7.84 7.84 2.94 0.98 0.98 0.98 100.00

Among our Founders, Mr. Ruan Hongliang is an executive Director, chairman of our Board and general manager of our Company. Mr. Wei Yezhong is an executive Director and deputy general manager of our Company. Mr. Zheng Wenrong is a Supervisor and chairman of board of Supervisors of our Company. Mr. Shen Fuquan and Mr. Zhu Quanming are Supervisors of our Company, whilst Mr. Zhang Yongming is an employee of our Company. Please refer to the section headed “Directors, Supervisors and Senior Management” for further details of the background and relevant industry experience of Mr. Ruan Hongliang, Mr. Wei Yezhong, Mr. Zheng Wenrong, Mr. Shen Fuquan and Mr. Zhu Quanming as of the Latest Practicable Date.

As of the Latest Practicable Date, Mr. Chen Xinhua, Mr. Zou Haiming, Ms. Wang Huifen, Ms. Luo Shuying, Mr. Xu Lingen, Mr. Wu Herong, Mr. Wu Jianping, Mr. Chen Jian and Mr. Lu Peihua did not own any Domestic Shares.

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HISTORY AND CORPORATE STRUCTURE

CORPORATE STRUCTURE

The chart below sets out our ownership and corporate structure immediately prior to the [REDACTED]:

==> picture [451 x 220] intentionally omitted <==

----- Start of picture text -----

Mr. Ruan Ms. Ruan Ms. Jiang Mr. Zhao 13 Individual
Hongliang Zeyun [(1)] Jinhua [(2)] Xiaofei [(3)] Shareholders [(4)]
32.54% 25.97% 24.01% 0.36% 17.12%
Our Company
(PRC)
100% 100% 100% 100% 100% 100% 100%
Shanghai Zhejiang Anhui Anhui Flat Zhejiang Flat HK Flat New
Flat Jiafu Flat Glass Materials Flat (HK) Energy
(PRC) (PRC) (PRC) (PRC) (PRC) (PRC)
----- End of picture text -----

Notes:

(1) Ms. Ruan Zeyun is the daughter of Mr. Ruan Hongliang and Ms. Jiang Jinhua, and the spouse of Mr. Zhao Xiaofei.
(2) Ms. Jiang Jinhua is the spouse of Mr. Ruan Hongliang and the mother of Ms. Ruan Zeyun.
(3) Mr. Zhao Xiaofei is the spouse of Ms. Ruan Zeyun and son-in-law of Mr. Ruan Hongliang and Ms. Jiang Jinhua.
(4) The 13 individual Shareholders and their respective approximate shareholding in our Company as of the Latest Practicable Date are as follows:

Name of Shareholders Mr. Zheng Wenrong (鄭文榮先生)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Shen Fuquan (沈福泉先生)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zhu Quanming (祝全明先生)(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Wei Yezhong (魏葉忠先生)(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Tao Hongqiang (陶虹強先生)(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Shen Qifu (沈其甫先生)(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ms. Tao Hongzhu (陶宏珠女士)(g). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Wei Zhiming (韋志明先生)(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Pan Rongguan (潘榮觀先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ms. Jiang Jinlan (姜瑾蘭女士)(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zhu Hai’ou (諸海鷗先生)(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zheng Yong (鄭永先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Sun Lizhong (孫利忠先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Registered capital held (RMB) 14,445,000 9,630,000 9,630,000 4,815,000 3,852,000 3,210,000 3,210,000 3,210,000 1,605,000 1,500,000 1,500,000 900,000 300,000	Approximate shareholding percentage
		(%) 4.28 2.85 2.85 1.43 1.14 0.95 0.95 0.95 0.48 0.44 0.44 0.27 0.09

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HISTORY AND CORPORATE STRUCTURE

(a) Mr. Zheng Wenrong is the chairman of the board of Supervisors of our Company.
(b) Mr. Shen Fuquan is a Supervisor of our Company.
(c) Mr. Zhu Quanming is a Supervisor of our Company.
(d) Mr. Wei Yezhong is an executive Director and a deputy general manager of our Company.
(e) Mr. Tao Hongqiang is a cousin of Mr. Ruan Hongliang, an uncle of Ms. Ruan Zeyun and the elder brother of Ms. Tao Hongzhu.
(f) Mr. Shen Qifu is an executive Director of our Company.
(g) Ms. Tao Hongzhu is a cousin of Mr. Ruan Hongliang, an aunt of Ms. Ruan Zeyun and the younger sister of Mr. Tao Hongqiang.
(h) Mr. Wei Zhiming is a deputy general manager of our Company.
(i) Ms. Jiang Jinlan is a sister of Ms. Jiang Jinhua, a sister-in-law of Mr. Ruan Hongliang and an aunt of Ms. Ruan Zeyun.
(j) Mr. Zhu Hai’ou is a nephew of Mr. Ruan Hongliang and a cousin of Ms. Ruan Zeyun.

The chart below sets out our ownership and corporate structure immediately after the [REDACTED], assuming the [REDACTED] is not exercised:

Mr. Ruan Hongliang	Ms. Ruan Zeyun(1)	Ms. Jiang Jinhua(2) Mr. Zhao Xiaofei(3)	Ms. Jiang Jinhua(2) Mr. Zhao Xiaofei(3)	Ms. Jiang Jinhua(2) Mr. Zhao Xiaofei(3)
[REDACTED]%	[REDACTED]%	[REDACTED]%		[REDACTED]% [REDACTED]% [REDACTED]%
			Our Company
			(PRC)

					100%	100%
Shanghai	Zhejiang	Anhui	Anhui Flat	Zhejiang	Flat HK	Flat New
Flat	Jiafu	Flat Glass	Materials	Flat	(HK)	Energy
(PRC)	(PRC)	(PRC)	(PRC)	(PRC)		(PRC)

Notes:

(1) Ms. Ruan Zeyun is the daughter of Mr. Ruan Hongliang and Ms. Jiang Jinhua and the spouse of Mr. Zhao Xiaofei.

(2) Ms. Jiang Jinhua is the spouse of Mr. Ruan Hongliang and the mother of Ms. Ruan Zeyun.
(3) Mr. Zhao Xiaofei is the spouse of Ms. Ruan Zeyun and son-in-law of Mr. Ruan Hongliang and Ms. Jiang Jinhua.

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HISTORY AND CORPORATE STRUCTURE

(4) The 13 individual Shareholders and their respective approximate shareholding in our Company immediately upon completion of the [REDACTED], assuming the [REDACTED] is not exercised, are as follows:

Name of Shareholders Mr. Zheng Wenrong (鄭文榮先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Shen Fuquan (沈福泉先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zhu Quanming (祝全明先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Wei Yezhong (魏葉忠先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Tao Hongqiang (陶虹強先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Shen Qifu (沈其甫先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ms. Tao Hongzhu (陶宏珠女士) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Wei Zhiming (韋志明先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Pan Rongguan (潘榮觀先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ms. Jiang Jinlan (姜瑾蘭女士) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zhu Hai’ou (諸海鷗先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Zheng Yong (鄭永先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Sun Lizhong (孫利忠先生) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Registered capital held (RMB) 14,445,000 9,630,000 9,630,000 4,815,000 3,852,000 3,210,000 3,210,000 3,210,000 1,605,000 1,500,000 1,500,000 900,000 300,000	Approximate shareholding percentage
		(%) [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

As confirmed by our PRC Legal Advisors, Shares issued by our Company prior to the Listing and held by the 13 individual Shareholders in the table above are subject to a lock-up period of one year commencing from the Listing Date. For management positions of and relationship amongst certain Shareholders shown in the above corporate structure chart, see corresponding notes of the chart as set out at page 125 to 126 in this section.

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OVERVIEW

We were the largest PV glass manufacturer globally and in China in terms of sales revenue of PV raw glass and processed PV glass in 2014, according to the Frost & Sullivan Report. Our sales revenue from PV glass in 2014 accounted for approximately 18.9% of the total global sales revenue of PV glass and approximately 26.3% of the total sales revenue of PV glass in China. Our PV glass products are mainly ultra-clear patterned PV glasses, which are primarily used to manufacture c-Si PV cells that can subsequently be assembled to form c-Si PV modules. Our PV glass can also be used as covers for thin film PV cells. We sell our PV glass products primarily to domestic and overseas PV module manufacturers. According to the Frost & Sullivan Report, most of the global top ten PV module manufacturers in 2014 have purchased our PV glass products. While we derive a majority of our revenue from PV glass, we also manufacture and sell float glass, household glass and architectural glass, which, together with the PV glass, comprise our four major glass products. For the year ended December 31, 2014, our revenue from such four major segments was RMB2,078.4 million, RMB353.8 million, RMB250.9 million and RMB139.2 million, respectively.

We are recognized as a leader in the PV glass industry in China as we were the first PV glass manufacturer in the PRC to obtain the SPF certifications for PV glass from the Institut Für Solartechnik in Switzerland for having passed the Solartechnik Prüfung Forschung (SPF) testing procedure tailored for PV glasses. In addition, we have participated in setting industry standards of PV glass manufacturing. Our PV glass products have also been recognized in China for its superb quality, which were used in several iconic structures, including in the PV projects of the China Pavilion and other theme pavilions of the 2010 Shanghai World Expo and the National Stadium in

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Beijing, also known as the Bird’s Nest. In addition, in recognition of our leading position and expertise in PV glass manufacturing, we received numerous awards in China, including, among others, the National Key New Product Award awarded by, among others, Ministry of Science and Technology of the PRC (中華人民共和國科學技術部) in 2008. We also possess industry-leading technologies and strong research and development capabilities that we believe are instrumental to our success. For instance, we have developed a coating agent in-house for our PV glass to enhance its light transmission rate. Based on laboratory testing carried out by an independent testing center, our 3.2mm coated PV glass has a light transmission rate of up to 94.5% as compared to 91.8% before the application of the coating agent. We have included the composition and the production method of this coating agent among one of our patents, “A reflection-reducing and high transmission rate PV glass and its production method”* (一種減反射高透過率鍍膜太陽能超白壓花玻璃及其製造方法).

We have experienced rapid growth during the Track Record Period. Our revenue for the years ended December 31, 2012, 2013 and 2014, was RMB1,488.6 million, RMB2,187.3 million and RMB2,833.3 million, respectively, representing a CAGR of 38.0%, and for the five months ended May 31, 2014 and 2015, was RMB1,149.8 million and RMB1,237.4 million, respectively. Our profit after tax for the years ended December 31, 2012, 2013 and 2014, was RMB59.9 million, RMB203.6 million and RMB392.7 million, respectively, representing a CAGR of 156.1%, and for the five months ended May 31, 2014 and 2015, was RMB162.1 million and RMB161.5 million, respectively. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our gross profit margin was 21.6%, 27.2%, 32.8%, 33.0% and 28.2%, respectively, and the gross profit margin for our PV glass segment was 25.8%, 27.6%, 37.0%, 36.4% and 33.1%, respectively.

OUR COMPETITIVE STRENGTHS

We believe that the following principal competitive strengths have contributed to our success and will continue to enable us to compete effectively and to capitalize on future growth opportunities.

We were the largest PV glass manufacturer globally and in China and one of the most experienced manufacturers in China with advantageous geographic location.

We were the largest PV glass manufacturer globally and in China in terms of sales revenue of PV raw glass and processed PV glass in 2014, according to the Frost & Sullivan Report. Our sales revenue of PV glass in 2014 accounted for approximately 18.9% and 26.3% of the total sales revenue globally and in China, respectively, which were 1.8% and 11.4% higher than the second and third largest PV glass manufacturers in the world, and 2.6% and 15.9% higher than the second and third largest PV glass manufacturers in China, respectively, according to the Frost & Sullivan Report. During the Track Record Period, the majority of our revenue was derived from the manufacture and sales of PV glass. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, our revenue from the PV glass segment was RMB1,120.5 million, RMB1,438.4 million, RMB2,078.4 million and RMB937.2 million, respectively, representing 75.3%, 65.8%, 73.3% and 75.7% of our total revenue for the same periods, respectively.

In addition, we were the first PV glass manufacturer in the PRC to obtain the SPF certifications for PV glass from the Institut Für Solartechnik in Switzerland for having passed the Solartechnik Prüfung Forschung (SPF) testing procedure tailored for PV glasses. The SPF certificate is generally

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recognized as the industry standard for quality PV glass and is generally required by our PV glass customers in Europe. We commenced manufacturing and selling PV glass products to domestic and overseas PV module manufacturers in 2006. Furthermore, we are recognized as a leader in the industry in China based on our participation in setting industry standards of PV glass manufacturing in China the use of our PV glass in certain iconic structures in the PRC and awards we received for our products. For example, our Company has been the deputy director of the PV Glass Specialized Committee of China Architectural and Industrial Glass Association (中國建築玻璃與工業玻璃協會光伏玻璃專業委員會) since October 2009. We have participated in the drafting of the PRC PV glass industry standards, including the standards for (i) the PV glass for solar cell modules (太陽能電池用玻璃) (JC/T 2001-2009), which became effective in June 2010; (ii) the anti-reflective coated glass for PV modules (太陽能光伏組件用減反射膜玻璃) (JC/T 2170-2013), which came into force in September 2013, and (iii) the norm of energy consumption per unit product of ultra-white patterned glass (光伏壓廷玻璃單位產品能源消耗限額) (GB30252-2013), which came into force in September 2014. In addition, our PV glass products were used in iconic structures in the PRC, including in the PV projects of the China Pavilion and other theme pavilions of the 2010 Shanghai World Expo and the National Stadium in Beijing, which is also known as the Bird’s Nest. In recognition of our leading position and expertise in the PV glass manufacturing, we received numerous awards in China, including National Key New Product Award awarded by, among others, Ministry of Science and Technology of the PRC for our PV glass products in 2008. See “— Awards, Accreditations and Memberships” for more information.

Moreover, we are located in northern Zhejiang Province, which is part of the Yangtze River Delta. We believe our strategic location is vital to our past and future success. The prosperity and continued economic growth of the region, especially in northern Zhejiang Province, coupled with the encouragement by the local governments to develop and apply new and clean alternative energy, created a conducive business environment for domestic PV module manufacturers, a majority of which are our existing and targeted customers. We believe our proximity to many of our existing and potential customers in the Yangtze River Delta will support our growth strategy and enable us to capture new business opportunities.

We have vertically integrated business operations, which enable us to better control our production cost and to maximize our return.

We have a vertically integrated business model which encompasses a comprehensive value chain from production of raw glass to finished goods. We currently offer four types of glass products: PV glass, float glass, household glass and architectural glass. The PV glass products we sell are generally ultra-clear patterned PV glass product, except we sold small quantities of PV raw glass to several of our customers during the Track Record Period. See “Financial Information — Factors Affecting Our Results of Operations — Our Product Mix and Customer Mix” and “Financial Information — Principal Income Statement Components — Revenue — Segment Revenue — PV Glass” for more information. During the Track Record Period, all of our PV glass products were processed from the PV raw glass we manufactured in-house, and approximately 90% of our household glass and architectural glass products were processed from the float glass we manufactured in-house.

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Silica sand is one of the principal raw materials we use in the production of our PV raw glass and float glass. During the Track Record Period, we procured ultra-clear silica sand for the production of our ultra-clear PV raw glass from suppliers in Hainan Province, Guangdong Province and Anhui Province, and float silica sand for the production of float glass from suppliers in Fengyang, Anhui Province. While maintaining stable relationships with our existing network of raw material suppliers, we continue to seek new suppliers that can offer us better prices. In order to secure a more stable source of silica sand supply for our production of float glass, we have acquired the mining right to the Mine. We commenced using the silica sand processed and refined from the quartzite ore extracted from the Mine for the production of our float glass since January 2015. Since we do not have processing and refinement capabilities, we have arrangements with certain of our customers to process the quartzite ore for us. After processing by such customers, the quartzite ore extracted from the Mine can be used in the production of our float glass. See “Business — Mining Rights” for more information.

In addition, we were one of the largest PV raw glass manufacturer in China in 2014, according to the Frost & Sullivan Report. As of December 31, 2014, we owned and operated seven furnaces for raw glass production, five of which were used for manufacturing ultra-clear PV raw glass and had an aggregate daily maximum production capacity of 2,290 tons, which ranked second in China in 2014, according to the Frost & Sullivan Report, and the remaining two furnaces were used for manufacturing float glass with an aggregate daily production capacity of 1,200 tons. As of the Latest Practicable Date, our aggregate daily maximum production capacity for PV raw glass and float glass remained at 2,290 tons and 1,200 tons, respectively. Of these furnaces, four have a daily maximum production capacity of 600 tons each, which are considered large-scale and are energy efficient. Based on our operating experience, a large-scale furnace of approximately 500 tons of daily maximum capacity and above can reduce unit energy consumption by up to approximately 20% as compared to a smaller furnace with approximately 300 tons of daily maximum production capacity. We plan to upgrade one of our existing PV glass furnaces with a daily maximum production capacity of 490 tons by optimizing its production method to enhance the efficiency of the fuel it burns. We believe this modification and upgrade will allow us to produce our PV glass on a more cost-efficient manner and enable us to further lower our emission of pollutants and thus, become more environmental friendly. See “— Our Business Strategies — We plan to increase our production efficiency in order to continue to maintain our leading position in the global and domestic PV glass industry.”

Furthermore, our production facilities in Jiaxing are located by the Beijing-Hangzhou Grand Canal with a self-operated pier located by the banks, which we use primarily to receive raw materials for our production. The availability of such convenient waterway transportation allows us to incur relatively low transportation cost. In addition, our manufacturing facilities are in close proximity to Shanghai, which also provides us with easy access to the Port of Shanghai for exportation of our products overseas.

Accordingly, we were able to improve our gross profit margin during the Track Record Period, which increased from 21.6% for the year ended December 31, 2012 to 28.2% for the five months ended May 31, 2015. We believe by vertically integrating our operations, we have been able to better control our production cost and secure a stable and long-term supply of certain key raw materials.

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We have a stable and strong customer base as we provide high quality products.

We have established and maintained strong and stable relationships with our customers. For example, we have supplied PV glass products to a renowned Japanese multinational corporation since 2008, and as of the Latest Practicable Date, such Japanese multinational corporation continued to use our PV glass products in their PV modules. Our relationship with majority of our top ten customers during the Track Record Period who are in the PV modules industry predates the Track Record Period. We are able to leverage these long-term business relationships to expand our PV glass business. For instance, according to the Frost & Sullivan Report, most of the global top ten PV module manufacturers in 2014 have purchased our PV glass products. In addition to our PV glass customers, we established and maintained long-term relationships with our household glass customers. For instance, we are one of the qualified suppliers of a large multinational furniture retailer, and we sell our household glass to this furniture retailer and its furniture manufacturers since 2006. We have to pass a very stringent set of testing protocols of our household glass products and production facilities to become a qualified supplier for its furniture products. See “— Our Customers — Process to Qualify as a Supplier to Our Customers” for more information.

We believe our ability to attract new customers and to maintain relationships with our existing customers is a testament of the quality of our products, which is a result of the high-quality raw materials we produced in-house and used in the manufacturing of finished products, our advanced technical knowhow and the fruits of our research and development efforts and stringent quality control procedures. For example, based on our industry knowledge, the industry average of glass bursting rate of ultra-clear patterned PV glass, a key indicator of the quality of ultra-clear patterned PV glass, is approximately 100 ppm but the average glass bursting rate of our ultra-clear PV patterned glass products is only approximately 50 ppm, which means our PV glass products are more stable than the average ones in the industry. In addition, we developed a coating agent in-house for our PV glass to enhance its light transmission rate, which could increase between 2.0% to 3.0% as compared to regular PV glass without such coating. Please see “— We possess industry-leading technologies and strong research and development capability” for more information.

We have a product mix that is adaptable to market fluctuations.

We currently have a mix of glass products, which consists of PV glass, float glass, household glass and architectural glass. PV glass is the principal glass products we manufacture and sell, which accounted for 75.7% of our total revenue for the five months ended May 31, 2015, whereas float glass, household glass and architectural glass accounted for 10.3%, 7.8% and 4.6% of our total revenue for the same period, respectively. The gross profit margin for PV glass, float glass, household glass and architectural glass was 33.1%, 3.6%, 20.9% and 12.8% for the five months ended May 31, 2015, respectively. Our product mix allows us to adjust and optimize our profitability based on the existing market conditions and industry dynamics, and to weather possible downturn of the market for an individual product. For example, in 2012, the PV glass industry experienced a slowdown in growth after close to 80% growth in production volume in the PRC in 2011 as compared to 2010. This slowdown resulted in excess supply of PV glass in the market and a decrease in the average selling price of our PV glass products. We temporarily shut down two of our PV glass furnaces for technical upgrades in the second half of 2012, and only resumed operations when the PV glass market began to recover in the second half of 2013. Despite a decrease in the segment revenue from our PV glass

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in 2012 compared to 2011, we were able to sustain our business primarily due to a rise in the demand for float glass during the year and the corresponding expansion of our float glass production capacity, which allowed us to manage our risks and minimize the impact our business from the cyclical nature of the PV industry. Moreover, we were able to adjust our product mix to improve our liquidity, ensure production quality and maintain effective resource allocation.

We possess industry-leading technologies and strong research and development capabilities.

Our research and development capability has been instrumental to our success. We are the largest PV glass manufacturer in China in terms of sales revenue in terms of PV raw glass and processed PV glass in 2014, according to the Frost & Sullivan Report. To continue to innovate and to maintain our market-leading position, we have a strong research and development department comprising over 30 research specialists, a majority of whom possess university degree or above. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we have invested RMB59.9 million, RMB66.6 million, RMB129.3 million and RMB44.4 million, respectively into research and development-related initiatives.

With our continuous research and development efforts, we have successfully developed a coating agent in-house for our PV glass to enhance its light transmission rate, which we believe sets our products apart from those of our competitors. When the coating agent is applied, the light transmission rate of our PV glass could increase between 2.0% to 3.0% as compared to regular PV glass without such coating. Based on laboratory testing carried out by an independent testing center, our 3.2mm coated PV glass has a light transmission rate of up to 94.5% as compared to a light transmission rate of approximately 91.8% before the coating is applied.

In addition to our in-house research and development capabilities, we have also collaborated with universities and research centers in China during the Track Record Period to exchange technological ideas in PV glass-related technologies to strengthen our technical knowhow.

As a result of these efforts, as of the Latest Practicable Date, we owned 36 patents, the majority of which were related to PV glass manufacturing technologies. Our advanced technologies in PV glass have also been recognized through the National Torch Plan (國家火炬計劃), a national program in China for the development and promotion of high-and-new technology products (高新技術產品). In addition, in 2010, the National Building Federation (中國建築材料聯合會) and China Machine and Metallurgy Building Materials National Committee (中國機冶建材工會全國委員會) awarded our ultra-clear patterned PV glass the First Prize in National Building Materials Industry Technological Innovation Award (全國建材行業技術革新獎), and China International Patent & Brand Expo Organizing Committee (中國國際專利與名牌博覽會組織委員會) and China International Patent & Brand Expo Accreditation Committee* (中國國際專利與名牌博覽會評審委員會) awarded the Gold Prize for the ultraviolet ray — blocking technology for our PV glass. Please see “— Awards, Accreditations and Memberships” for details.

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Continue to optimize our product mix

We plan to continue to optimize our product mix so we can readily adapt to the changing market conditions and reduce any adverse impact on our operations. Meanwhile, we aim to increase our profitability by allocating more production volume to products with high gross profit margins. The PRC government is also encouraging the increased use of energy-efficient materials such as Low-E glass in order to become more environmental friendly. According to the Twelve Five-year Plan for Construction Materials Industry 《建材工業( “十二五”發展規劃》) and the Twelve Five-year Plan for New Materials Industry 《新材料產業( “十二五”發展規劃》) issued by the Ministry of Industry and Information Technology of the PRC on November 8, 2011 and on January 4, 2012, respectively, the development of energy efficient safety glass products is one of the key development areas, and the use of Low-E glass is encouraged. Therefore, we plan to adjust our product mix to take advantage of the growth opportunity in energy-efficient materials by establishing new procressing facilities for Low-E glass and auxiliary processing facilities for Low-E composite glass in Jiaxing, Zhejiang Province. The annual processing capacity of new Low-E glass facilities and Low-E composite glass is expected to be approximately 5.8 million sq.m. and 1.0 million sq.m., respectively. We intend to invest an aggregate of approximately RMB200.0 million for establishing the new processing facilities for the Low-E glass and auxiliary processing facilities for the Low-E composite glass in Jiaxing, Zhejiang Province, the PRC, which will primarily include the purchase and installation of machinery and equipment, and the construction of the processing premises. Approximately [REDACTED]% of these expected capital expenditures will be funded by the net proceeds from the [REDACTED] and the remainder from our internal funds. We expect these new processing facilities for the Low-E glass and auxiliary processing facilities for the Low-E composite glass will commence operations by the end of 2016.

Furthermore, the PRC government recently launched “The Belt and Road Initiative,” which aims to promote economic cooperation between China and its neighbouring countries and creates new markets for PRC companies through infrastructure investment in China’s less developed trading partners. We believe this initiative may affect the demand of our architectural glass.

Further strengthen our research and development capabilities

We believe our sustainable development in the glass industry is attributable to our capabilities in technological innovation. The efficiency of the electricity generated by solar power depends on the quality of the PV glass. Hence, lowering the iron content and improving the light transmission rate of the PV glass, among other things, are important aspects of our continued research and development. We plan to devote more resources to our research and development department by continuing to improve our production technologies, in particular, technologies relating to the anti-reflective coating for PV glass to increase light transmission rate and the Low-E glass coating, and to develop new products such as PV glass with thickness under 2.8mm. Furthermore, we intend to improve the quality of our PV glass by further reducing the rate of defective glass in the production process.

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BUSINESS

In order to achieve these goals, we aim to further expand our research and development department by hiring additional qualified and experienced personnel. We also plan to purchase new equipment for PV glass and Low-E glass production and research. In addition, we intend to continue to collaborate with universities and research and development centers in China to improve the manufacturing process and the quality of our glass products while reducing production cost and improving our operating efficiency. We believe these measures are vital for our continued success and our market-leading position.

Expand our geographical coverage in China by expanding our production capabilities domestically

Our production facilities are currently located in Jiaxing, Zhejiang Province. According to the Frost & Sullivan Report, outside of the Yaugtze River Delta, major PV module factories are located in Eastern and Central China. In order to leverage on our existing business presence in Anhui Province, which is located closer to Central China as compared to Jiaxing, we intend to build PV processing facilities there to (i) better serve our customers located in Central China or in close proximity to Central China; (ii) lower our transportation cost for shipment to these customers; and (iii) increase our market penetration in these areas.

We plan to establish PV glass processing facilities in Anhui Province as our preliminary launch in the area. We expect the new processing facilities will have an annual processing capacity of approximately 9.6 million sq.m. of PV glass. We expect to begin preliminary discussions with the local government in the Anhui Province for the project and to commence the approval applications in the first half of 2016. We expect to commence constructions of the processing facilities in the second half of 2016, which will commence operation in the first half of 2017. We expect to initiate commercial production during the first half of 2018 and intend to form a sales team in Anhui Province to allow us to reach to potential customers in or around Central China more easily and to better serve our existing customers in these regions. As of the Latest Practicable Date, we were in the process of conducting the feasibility study. Based on our preliminary estimation, we expect to invest an aggregate amount of approximately RMB94.0 million for our expansion in Anhui Province, which will primarily include the construction of PV glass processing facilities, the acquisition of PV glass processing and auxiliary machinery and the acquisition of the land use rights for the premises. We paid a deposit of RMB24.0 million to the local government in Anhui Province for the acquisition of the land use rights, and we expect the remaining RMB70.0 million of capital expenditures to be funded by our internal sources of capital. See also “Financial Information — Contractual Commitments — Capital Commitments” for further details on our RMB24.0 million deposit made to the local government.

Capitalizing on our existing distributed PV systems operating experience to expand the capacity of our distributed PV systems

In 2014, we successfully installed our first distributed PV systems, providing us with approximately 10.3MW of electricity per year, which was equivalent to approximately 0.8% of our total electricity consumed for the year ended December 31, 2014, based on our internal records. For the five months ended May 31, 2015, our distributed PV systems provided approximately 1.8% of our total electricity consumed, based on our internal records.

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BUSINESS

As we continue to optimize our cost structure and enhance our profitability, we are currently exploring opportunities to expand our distributed PV systems by leveraging on our existing operating experience. We plan to construct new distributed PV systems with a total capacity of 15.0MW, all of which will be used internally for our production. We intend to invest an aggregate of approximately RMB100.0 million for the construction of and purchase the equipment for these 15.0 MW distributed PV systems, a majority of which will be funded by the net proceeds from the [REDACTED] and the remainder from our internal funds. As of the Latest Practicable Date, we have obtained the approval from the relevant PRC government authorities for such expansion. See “— Our Production Facilities and Processes — Power Generation Facilities” for more information.

OUR BUSINESS MODEL

We are principally engaged in the design, development, production and sales of PV glass, which is sold to PV module manufacturers in China and overseas. PV modules are made up of multiple PV cells in an integrated group. PV cells include c-Si PV cells and thin film PV cells. According to the Frost & Sullivan Report, in terms of installed capacity, c-Si PV cells account for approximately 90.5% of PV cells globally in 2014. Our PV glass products are primarily used for the production of c-Si PV cells but could also be used as covers for thin film PV cells.

In addition to PV glass, which is processed from PV raw glass that we manufacture in-house, we also manufacture and sell float glass, household glass and architectural glass. Float glass is both a product we directly sell to certain customers and a type of raw glass that we use to produce household glass and architectural glass. To maintain a cost-efficient operating structure, we have adopted a vertically integrated business model that gives us more control over our production. Our vertical integration commences from the production of raw glasses (comprising PV raw glass and float glass), which are subsequently processed into PV glass, household glass and architectural glass products, as the case may be. During the Track Record Period, all of our PV glass products were processed from the PV raw glass we manufactured in-house, and approximately 90% of our household glass and architectural glass products were processed from the float glass we manufactured in-house. We occasionally purchase float glass from third parties, primarily for certain special orders from customers with particular requirements or if it would be more economical to procure from third parties.

We have obtained the mining rights to the Mine in Anhui Province to mine quartzite ore, which can be processed into silica sand, which is one of the major raw materials we use for the production of float glass. During the Track Record Period, we engaged an Independent Third Party to perform extraction work in the relevant areas of the Mine. Since we do not have any processing or refinement capabilities, we generally sell the quartzite ore extracted from the Mine to certain of our customers who will process and refine such quartzite ore into silica sand. We have arrangements in place with these customers pursuant to which they agree to prioritize the supply of silica sand to us according to our demand if the quality of the silica sand meets our standards. However, we are not obligated to purchase silica sand from them. Through this arrangement, we can manage our procurement costs efficiently and have a stable source of quality float silica sand in case if there is a shortage in the market. Since January 2015, we have purchased certain amount of silica sand processed by such customers for our float glass production. See “— Mining Rights” in this section for more information.

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BUSINESS

The following diagram illustrates our business models for different product segments:

==> picture [445 x 337] intentionally omitted <==

----- Start of picture text -----

Our Business
Domestic PV module manufacturers
PV raw
PV glass
glass [(3)]
External Overseas PV module manufacturers
raw
materials Processing
and Domestic furniture manufacturers and
energy processing companies
supply [(1)]
Household
glass
Multinational furniture retailers
products
Overseas furniture manufacturers and
Float raw
processing companies
glass
Quartzite
ore [(2)]
Architectural Domestic architectural contractors
glass
products
Overseas architectural contractors
Domestic architectural glass
Domestic glass processing companies
processing companies
Domestic construction companies
Overseas glass processing companies
Domestic glass wholesalers
----- End of picture text -----

Notes:

(1) Includes fuel, all of which is procured from third parties, and electricity, a portion of which is provided internally through our residual heat power facilities and our distributed PV systems.
(2) Quartzite ore extracted from the Mine is subject to refinement by external parties into silica sand, which we have priority to purchase such silica sand for our production use. Since January 2015, certain amount of float silica sand processed and refined from the Mine’s quartzite ore was used in the production of our float glass.
(3) We sold a small amount of PV raw glass to certain of our customers during the Track Record Period. For the years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015, based on our internal records, we sold approximately 1.3 million sq.m., 5.9 million sq.m., 1.1 million sq.m. and 0.5 million sq.m. of PV raw glass to third parties, respectively, generating revenue of approximately RMB17.3 million, RMB104.1 million, RMB24.1 million and RMB10.4 million, respectively.

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BUSINESS

OUR PRODUCTS

We currently manufacture and sell four main types of glass products, namely, (i) PV glass, (ii) float glass, (iii) household glass and (iv) architectural glass. The following table sets forth our revenue by product type during the Track Record Period:

		For the	year ended	December 31,	December 31,		For the five	months	ended May 31,	ended May 31,
Product type	2012		2013		2014		2014		2015
	RMB’000	%	RMB’000	%	RMB’000	%	RMB’000	%	RMB’000	%
							(unaudited)
PV glass . . . . .	1,120,450	75.3	1,438,413	65.8	2,078,373	73.3	845,016	73.5	937,227	75.7
Float glass . . . .	170,616	11.5	425,298	19.4	353,846	12.5	159,089	13.8	126,978	10.3
Household glass.	182,218	12.2	222,578	10.2	250,875	8.9	105,499	9.2	96,579	7.8
Architectural
glass . . . . . .	15,273	1.0	100,770	4.6	139,197	4.9	39,868	3.5	57,147	4.6
Others(1). . . . . .	—	—	224	—	11,015	0.4	322	—	19,501	1.6
Total . . . . . . .	1,488,557	100.0	2,187,283	100.0	2,833,306	100.0	1,149,794	100.0	1,237,432	100.0

Note:

(1) Others mainly include the quartzite ore extracted from the Mine, which was sold to third parties since 2013.

The following table sets forth our gross profit and gross profit margin by product type during the Track Record Period:

For the year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % (unaudited) 288,977 25.8 396,803 27.6 768,601 37.0 307,694 36.4 309,811 33.1 (2,536) (1.5) 110,371 26.0 69,475 19.6 36,123 22.7 4,607 3.6 31,212 17.1 54,411 24.4 62,531 24.9 25,227 23.9 20,200 20.9 3,470 22.7 33,345 33.1 33,762 24.3 10,067 25.3 7,313 12.8 — — (69) (30.8) (6,035) (54.8) 140 43.5 7,187 36.9 321,123 21.6 594,861 27.2 928,334 32.8 379,251 33.0 349,118 28.2	For the year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % (unaudited) 288,977 25.8 396,803 27.6 768,601 37.0 307,694 36.4 309,811 33.1 (2,536) (1.5) 110,371 26.0 69,475 19.6 36,123 22.7 4,607 3.6 31,212 17.1 54,411 24.4 62,531 24.9 25,227 23.9 20,200 20.9 3,470 22.7 33,345 33.1 33,762 24.3 10,067 25.3 7,313 12.8 — — (69) (30.8) (6,035) (54.8) 140 43.5 7,187 36.9 321,123 21.6 594,861 27.2 928,334 32.8 379,251 33.0 349,118 28.2	For the year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin Gross profit Gross profit margin RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % (unaudited) 288,977 25.8 396,803 27.6 768,601 37.0 307,694 36.4 309,811 33.1 (2,536) (1.5) 110,371 26.0 69,475 19.6 36,123 22.7 4,607 3.6 31,212 17.1 54,411 24.4 62,531 24.9 25,227 23.9 20,200 20.9 3,470 22.7 33,345 33.1 33,762 24.3 10,067 25.3 7,313 12.8 — — (69) (30.8) (6,035) (54.8) 140 43.5 7,187 36.9 321,123 21.6 594,861 27.2 928,334 32.8 379,251 33.0 349,118 28.2	For the five months ended May 31,	For the five months ended May 31,
2012 Gross profit Gross profit margin RMB’000 % 288,977 25.8 (2,536) (1.5) 31,212 17.1 3,470 22.7 — — 321,123 21.6	2013 Gross profit Gross profit margin RMB’000 % 396,803 27.6 110,371 26.0 54,411 24.4 33,345 33.1 (69) (30.8) 594,861 27.2		2015
Gross profit RMB’000 288,977 (2,536) 31,212 3,470 — 321,123	Gross profit RMB’000 396,803 110,371 54,411 33,345 (69) 594,861	Gross profit RMB’000 768,601 69,475 62,531 33,762 (6,035) 928,334	Gross profit RMB’000 309,811 4,607 20,200 7,313 7,187 349,118	Gross profit margin
				% 33.1 3.6 20.9 12.8 36.9 28.2

Note:

(1) Others mainly include the quartzite ore extracted from the Mine, which was sold to third parties since 2013.

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BUSINESS

We primarily sell our glass products to customers in the PRC, Japan, Singapore, Korea, Taiwan, Germany and the United States. The following table sets forth our revenue by geographical location during the Track Record Period:

For the	For the	year ended December 31,	year ended December 31,	year ended December 31,	For the five months ended May 31,	For the five months ended May 31,	For the five months ended May 31,
2012	% 53.8 7.5 24.4 10.1 3.3 0.9 100.0	2013	% 57.4 8.0 21.1 9.8 2.9 0.8 100.0	2014	2014 RMB’000 % (unaudited) 635,393 55.3 169,067 14.7 196,102 17.0 112,188 9.8 25,831 2.2 11,213 1.0 1,149,794 100.0	2015
RMB’000 800,002 111,341 363,601 150,537 49,806 13,270		RMB’000 1,255,370 174,153 461,250 214,466 63,646 18,398		RMB’000 1,533,670 453,109 503,880 250,650 60,555 31,442		RMB’000 679,189 183,537 241,434 86,686 35,234 11,352	% 54.9 14.8 19.5 7.0 2.9 0.9
1,488,557		2,187,283		2,833,306		1,237,432	100.0

Note:

(1) Include, among others, Korea, Singapore and Taiwan, and exclude the PRC and Japan.

We set out below a description of our major products:

PV Glass

We commenced production and sales of PV glass in 2006. PV cells are divided into c-Si PV cells and thin film PV cells, with c-Si PV cells accounting for approximately 90.5% of PV cell globally in 2014 in terms of installed capacity, according to the Frost & Sullivan Report. PV glass is generally used as the cover of c-Si PV cells and thin film PV cells. Our PV glass products are mainly ultra-clear patterned PV glasses. Our PV glass is primarily used to manufacture c-Si PV cells, which could then be assembled to form c-Si PV modules (also known as c-Si PV panels). Our PV glass can also be used as covers for thin film PV cells, which account for the remaining approximately 9.5% of the PV cells globally in 2014 in terms of installed capacity, according to the Frost & Sullivan Report.

PV glass generally has a high level of light transmittance due to its pattern on the surface and low-iron content. The pattern on the surface of PV glass deceases the light reflection and increases the light refraction and therefore, permits more light to penetrate through the glass. Our PV glass products range between 2.8mm and 6.0mm in thickness with at least 91.5% light transmission rate through the glass without coating and at least 93.5% light transmission rate with coating.

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BUSINESS

We manufacture PV glass products for our customers in accordance with their requirements, such as surface quality, dimension, light transmission rate and strength. Our PV glass is tempered to give desired mechanical strength to the glass to withstand adverse weather conditions and normal wear-and-tear. The key raw materials we use in the production of our PV glass mainly include ultra-clear silica sand, soda ash (also known as sodium carbonate), limestone and dolomite.

We generally sell our PV glass products to PV module manufacturers in the PRC and overseas. During the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we sold approximately 35.4 million sq.m., 51.2 million sq.m., 69.5 million sq.m. and 32.0 million sq.m. of PV glass, respectively, with an average selling price of approximately RMB31.69 per sq.m., RMB28.12 per sq.m., RMB29.89 per sq.m. and RMB29.28 per sq.m., respectively.

We set forth below an illustration of our PV glass products:

Ultra-clear patterned PV glass

==> picture [141 x 94] intentionally omitted <==

Float Glass

Float glass is primarily produced as a raw material for the manufacturing of our other types of glass, such as household glass and architectural glass. Our first float glass production line commenced operation in October 2011 and our second float glass production line commenced operation in December 2012. Our float glass furnaces operate on a non-stop basis to maintain our production efficiency. Any suspension of our glass melting furnaces would otherwise require us to incur significant amount of re-starting costs and waste raw materials in the event these furnaces resume their operations. On the other hand, we manufacture household glass and architectural glass according to the orders we receive from our customers, which may not be able to fully utilize the amount of float glass we produce. Therefore, we sell a portion of our float glass to glass processing manufacturers and glass wholesalers. See “— Our Customers — Float Glass Customers” for more information.

We generally manufacture the float glass that we use in our production of household glass and architectural glass based on sizes that we require for the type of the household glass or architectural glass we produce. As for float glass that we sell to glass processing companies and glass wholesalers, we generally manufacture them based on industry-standard dimensions and thicknesses. The key raw materials we use in the production of our float glass include float silica sand, soda ash, dolomite, limestone and sodium sulfate.

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BUSINESS

During the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we sold a total of approximately 159,900 tons, 340,990 tons, 311,650 tons and 121,800 tons of float glass, respectively, with an average selling price of approximately RMB1,066.94 per ton, RMB1,247.23 per ton, RMB1,135.39 per ton and RMB1,042.21 per ton, respectively.

Household Glass

Our household glass products mainly comprise mirror products, including silver mirror glass, which has a high reflection rate of approximately 92% and is principally used for interior construction, tempered glass for cabinet doors and shelves and other types of glass for household use, such as kitchen cabinets, furniture and interior decorations. We manufacture our household glass products primarily from the float glass we produce in-house. We mainly sell our household glass products to overseas customers, which generally require a high quality standard. During the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we sold a total of approximately 5.0 million sq.m., 5.9 million sq.m., 6.7 million sq.m. and 2.8 million sq.m. of household glass, respectively, with an average selling price of approximately RMB36.37 per sq.m., RMB37.47 per sq.m., RMB37.34 per sq.m. and RMB35.02 per sq.m., respectively.

We set forth below an illustration of our household glass products:

Silver mirror glass

==> picture [155 x 104] intentionally omitted <==

Architectural Glass

Our architectural glass products mainly comprise tempered glass, Low-E glass, insulated glass and laminated glass. Tempered glass is a type of safety glass, and is principally used when safety is prioritized, such as by building regulations. When the glass breaks, tempered glass will break into smaller and rounder pieces, whereas laminated glass will prevent the glass from separating. Tempered glass has a higher resistance to thermal stress and wind, and hence, is mainly used for building windows, glass railings, escalator barriers, vehicle windows, vessel windows, glass desktops, display shelves, interior decoration and furniture. Laminated glass, on the other hand, is made of two sheets of glass bonded together with polyvinyl butyral, a plastic inner layer which prevents separation. Laminated glass is widely used in bus stations, airports, banks, showrooms, vehicles and vessels windows, furniture and interior decorations. In addition, our insulated glass is principally used for heat or sound insulation, such as in office buildings and airports.

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BUSINESS

Low-E glass is also known as low-emissivity coated glass, which is coated with compounds that have low surface radiation rate to reduce infrared radiation, or heat generally, through the glass while permitting light through the glass. In cooler climate or during the winter season, Low-E glass could help trap the heat indoors by reducing the loss of heat from indoors to outdoors. In warmer climate or during the summer season, Low-E glass could help reflect heat and radiation away from the building and keep the space indoors cooler than outdoors. In addition, Low-E glass can be further processed from laminated glass, tempered glass and insulated glass into various types of Low-E composite glass products. Therefore, Low-E glass and Low-E composite glass are considered more environmental friendly. They can be used in office and residential buildings, such as glass doors or windows, to increase the efficiency of heat insulation. We commenced commercial production of Low-E glass in 2012. We believe our offering of Low-E glass will become a key feature in our architectural glass portfolio as the customers are more actively searching for energy saving solutions.

We may adopt several different production processes to meet the specification of product orders from our customers. Similar to our household glass, we also produce architectural glass products primarily from the float glass we manufacture in-house.

During the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we sold approximately 0.2 million sq.m., 1.7 million sq.m., 2.7 million sq.m. and 1.0 million sq.m. of architectural glass, respectively, with an average selling price of approximately RMB67.89 per sq.m., RMB57.98 per sq.m., RMB51.71 per sq.m. and RMB56.21 per sq.m., respectively.

Set forth below are illustrations of our architectural glass products:

==> picture [357 x 131] intentionally omitted <==

----- Start of picture text -----

Tempered glass Laminated glass
Low-E glass Insulated glass
----- End of picture text -----

==> picture [156 x 105] intentionally omitted <==

==> picture [157 x 104] intentionally omitted <==

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BUSINESS

OUR PRODUCTION FACILITIES AND PROCESSES

Our production facilities are strategically located in Jiaxing, Zhejiang Province, the PRC, in the Yangtze River Delta . Our production facilities in Jiaxing are located by the Beijing-Hangzhou Grand Canal with a self-operated pier located by the banks, which provides us with a convenient waterway to transport raw materials for our production.

As of the Latest Practicable Date, we operated 16 production lines for the production of PV raw glass, 21 dedicated processing lines for PV glass, two production lines for float glass, 12 processing lines for household glass and 12 processing lines for architectural glass (including tempering, laminating, insulating and Low-E coating).

Production Facilities For PV Glass

Each of our production lines for PV raw glass includes, among others, batch house, furnace, lehr and tester. Each of our processing lines for PV glass includes, among others, edging machine, coating machine and tempering machine. We currently operate five PV glass furnaces along with 16 PV raw glass production lines and 21 dedicated processing lines for PV glass. All of our PV glass is processed from the PV raw glass we manufacture in-house. Our production lines, including the furnaces, generally operate 24 hours a day, seven days a week.

The following diagram illustrates one of the setups of our PV raw glass production lines:

==> picture [251 x 128] intentionally omitted <==

----- Start of picture text -----

PV production line 1
PV production line 2
Batch
Furnace
house
PV production line 3
PV production line 4
----- End of picture text -----

The following table sets forth the designed production capacity, actual production volume and utilization rate for our PV raw glass during the Track Record Period:

PV raw glass Designed production capacity(2) (tons) . . . . . . . . . . . . . . . . . . . . Actual production volume (tons) . Utilization rate(5) (%). . . . . . . . . .	For the year ended December 31, 2012(1) 2013(1) 2014(1) 479,040 570,650(3) 835,850(4) 364,739 447,976 662,247 76.1 78.5 79.2	For the year ended December 31, 2012(1) 2013(1) 2014(1) 479,040 570,650(3) 835,850(4) 364,739 447,976 662,247 76.1 78.5 79.2	For the five months ended May 31,
	2012(1) 479,040 364,739 76.1	2013(1) 570,650(3) 447,976 78.5	2015(1)
			345,790 261,816 75.7

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BUSINESS

Notes:

(1) The data and information set out in the table were based on our internal records.
(2) Designed production capacity is calculated by multiplying the designed daily production capacity by actual production days for the year or period.
(3) Our designed production capacity increased from 2012 to 2013 primarily due to (i) one of our large PV glass furnaces with a daily maximum production capacity of 600 tons commenced operations in May 2013; and (ii) two of our PV glass furnaces with daily maximum production capacity of 300 tons each that were temporarily shut down in the second half of 2012 to undergo technical upgrades, resumed operations in the fourth quarter of 2013.
(4) Our designed production capacity increased in 2014 compared to 2013 primarily due to an increase in the number of days in which our PV glass furnaces operated.
(5) Utilization rate is calculated by dividing the actual production volume for the year or period by the designed production capacity for the year or period.

The following table sets forth the designed processing capacity and actual processing volume and utilization rate for our PV glass during the Track Record Period:

PV glass Designed processing capacity(2)(3) (sq.m.) . . . . . . . . . . . . . . . . . . . . . Actual processing volume(2) (sq.m.). Utilization rate(6) (%). . . . . . . . . . . .	For the year ended December 31, For the five months ended May 31, 2012(1) 2013(1) 2014(1) 2015(1) 63,679,820 78,604,820(4) 93,852,820(5) 39,511,868 33,470,406 44,305,215 74,402,247 32,105,189 52.6 56.4 79.3 81.3	For the five months ended May 31,
	2012(1) 63,679,820 33,470,406 52.6	2015(1)

Notes:

(1) The data and information set out in the table were based on our internal records.
(2) Designed processing capacity is calculated by multiplying the designed daily processing capacity by actual days of operations for the year or period.
(3) The designed processing capacity and the actual processing volume are calculated based on the capacity and processing volume of dedicated PV glass processing lines, respectively.
(4) Our designed processing capacity increased from 2012 to 2013 as four new dedicated processing lines commenced operations in 2013.
(5) Our designed processing capacity increased from 2013 to 2014 as a new dedicated processing line commenced operations in 2014.
(6) Utilization rate is calculated by dividing the actual processing volume for the year or period by the designed processing capacity for the year or period.

During the Track Record Period, we processed all of the PV glass products from the PV raw glass we manufactured in-house.

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BUSINESS

Production Facilities For Float Glass

Each of our production lines for float glass includes, among others, batch house, furnace, tin bath, lehr, and tester. We currently have two float glass furnaces and two float glass production lines. Our production lines, including the furnaces, generally operate 24 hours a day, seven days a week.

The following table sets forth the designed production capacity, actual production volume and utilization rate for our float glass during the Track Record Period:

Float glass Designed production capacity(2) (tons). . Actual production volume (tons) . . . . . . Utilization rate(4) (%). . . . . . . . . . . . . . .	For the year ended December 31, 2012(1) 2013(1) 2014(1) 234,600 438,000(3) 438,000 221,944 435,657 432,631 94.6 99.5 98.8	For the year ended December 31, 2012(1) 2013(1) 2014(1) 234,600 438,000(3) 438,000 221,944 435,657 432,631 94.6 99.5 98.8	For the five months ended May 31,
	2012(1) 234,600 221,944 94.6	2013(1) 438,000(3) 435,657 99.5	2015(1)
			181,200 173,284 95.6

Notes:

(1) The data and information set out in the table were based on our internal records.
(2) Designed production capacity is calculated by multiplying the designed daily production capacity by actual production days for the year or period.
(3) Our designed production capacity increased in 2013 compared to 2012 primarily because we commenced operations of our second float glass furnance with a daily maximum production capacity of 600 tons in December 2012.
(4) Utilization rate is calculated by dividing the actual production volume for the year or period by the designed production capacity for the year or period.

Processing Facilities For Household Glass and Architectural Glass

Our household glass and architectural glass products are processed from float glass. Our processing lines for household glass include, among others, edging machine, tempering machine, printing machine and cutting machine. Our processing lines for architectural glass include, among others, Low-E coating processing line, automatic insulating glass processing line, edging machine, tempering machine, cutting machine and autoclave.

Since our customers for household glass and architectural glass generally have their specific requirements that may involve one or more manufacturing processes, the total amount of work done on each type of finished product would differ from one customer to another or from one order to another. Hence, as there were no uniform standardized processes for household glass and architectural glass products sold to our customers, our Directors consider that the processing capacity and utilization rate for our household glass and architectural glass products could not be accurately ascertained and if any assumptions were made solely for the purpose of calculating the production capacity and utilization rate of our household glass and architectural glass products, the result would not be representative or meaningful.

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Production Processes

The following diagram sets forth the production process of our PV glass, our major product:

==> picture [452 x 115] intentionally omitted <==

----- Start of picture text -----

Weighing and
Quality
mixing of Melting Shaping Cooling Cutting Control Milling
raw materials
Production of PV raw glass Processing
Finished Quality
product Packaging control Washing Tempering Coating Drying Washing
PV glass Processing PV raw glass into PV glass
----- End of picture text -----

The following diagram sets forth the production process of our float glass we sold to third parties:

==> picture [447 x 29] intentionally omitted <==

----- Start of picture text -----

Weighing and Quality Finished
mixing of Melting Shaping Cooling Cutting control Packaging Product
raw materials
----- End of picture text -----

As for our household glass and architectural glass, the manufacturing process will depend on the specifications from, and requirements of, our customers. Hence, we do not have standardized manufacturing process for customized finished products. As an example, the following diagram sets forth the production process of our Low-E glass:

==> picture [391 x 30] intentionally omitted <==

----- Start of picture text -----

(Raw glass)Float glass Washing Coating Qualitycontrol Spraying/foiling Packaging FinishedProduct
----- End of picture text -----

Power Generation Facilities

As a continuing effort to reduce production costs, we have successfully installed residual heat power generation facilities and 10.3MW distributed PV systems at our Jiaxing production facilities to fulfill part of our electricity needs. We established and operated our residual heat power generation facilities since 2012. The principal equipment of our residual heat power generation facilities include residual heat power generator and flue gas treatment equipment. Our distributed PV systems came into operations in June 2014 and were installed on the roof-top of our production facilities. The principal equipment of our distributed PV systems are c-Si PV panels. We have obtained the relevant government approval for the operation of our distributed PV systems. See “— Regulatory Compliance and Legal Proceedings — Licenses and Permits” for more information.

As of May 31, 2015, our power generation facilities had a total capacity of approximately 119.5MW, which consisted of 109.2MW from the residual heat power generation and 10.3MW from the distributed PV systems. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, the total cost of electricity associated with our production was RMB150.9 million, RMB180.8 million, RMB243.8 million and RMB106.0 million, respectively.

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During the same period, our residual heat power generation facilities provided us with 7.4%, 16.2%, 18.9% and 11.8% of our total electricity consumption, respectively, and for the year ended December 31, 2014 and for the five months ended May 31, 2015, our distributed PV systems provided us with 0.8% and 1.8% of our total electricity consumption, respectively, based on our internal records.

As we continue to optimize our cost structure and enhance our profitability, we are currently exploring opportunities to expand our distributed PV systems by leveraging on our operating experience. We plan to construct new distributed PV systems at our Jiaxing production facilities with a total capacity of 15.0MW, all of which will be used internally for our production. As of the Latest Practicable Date, we have obtained the approval from the relevant PRC government authorities for such expansion.

As of the Latest Practicable Date, Ms. Ruan Zeyun, the daughter of Mr. Ruan Hongliang and Ms. Jiang Jinhua, who is also our chief financial officer and the Board secretary, held the entire equity interest in a company named Jiaxing Yihe Energy Co., Ltd. (嘉興義和能源有限公司) (“Yihe Energy”). It is intended that upon the registered capital of Yihe Energy being paid up and subject to obtaining all relevant government approvals, it will engage in the business of construction and operation of distributed PV systems and PV power stations and the sale of electricity generated by such distributed PV systems and PV power stations to third parties. For details of the interests of Ms. Ruan in Yihe, please refer to the section headed “Relationship with Controlling Shareholders — Interest of Ms. Ruan Zeyun” in this document.

Our Oversea Expansion Plan For PV Glass Production

Overview

During the Track Record Period, we have sold a substantial portion of our glass products to overseas customers. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, our revenue generated from overseas sales amounted to RMB688.6 million, RMB931.9 million, RMB1,299.6 million and RMB558.2 million, respectively, representing 46.2%, 42.6%, 45.9% and 45.1% of our total revenue for those years or periods, respectively. We expect to continue to sell our glass products overseas. According to the Frost & Sullivan Report, the global annual production volume of PV modules is expected to grow from 52.9GW in 2015 to 77.8GW in 2019, representing a CAGR of 10.1%, of which, the annual production volume of PV modules in China is expected to grow from 40.0GW in 2015 to 64.4GW in 2019, representing a CAGR of 12.6%. Based on this growth projection, we believe we can increase our production and processing capacities to satisfy the projected increasing demand of our PV glass products. In addition, according to the Guidance on Serious Excess Production Capacities Contradictions issued by the State Council of the PRC on October 2013, Chinese glass companies are encouraged by the PRC government to expand their production overseas. Based on the foregoing reasons, we plan to establish PV glass manufacturing facilities outside China to expand our PV glass production capacity, to increase our overseas PV glass sales and to provide better localized services to our overseas PV glass customers, including those located in Southeast Asia, India, Europe, Korea and Japan.

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Accordingly, we have conducted a detailed feasibility study in May 2015 pursuant to which we plan to design and construct PV raw glass production facilities with an expected daily maximum production of 800 tons and an expected designed annual processing capacity of PV glass of approximately 27.0 million sq.m. in a suitable location in Northern Vietnam. We plan to commence construction of the manufacturing facilities in the third quarter of 2016 and expect to complete construction during the first quarter of 2017 and begin commercial production in the second quarter of 2017. Please see “— Construction Timetable” for more information. We considered that having new production facilities in Vietnam, is in the interest of our Company after taking into account the following factors:

Vietnam has recently become a key target for foreign direct investment due to its relatively safe environment for investment, abundant natural resources, relatively low labor cost and favorable government policies, such as preferential tax incentives;
Vietnam became a member of the ASEAN in 1995, which we could rely on to expand our presence into other ASEAN member states, such as Singapore, Malaysia, the Philippines, Thailand and Indonesia. Furthermore, Vietnam has entered into bilateral trade agreements with Korea and Japan, two of our key export destinations for our PV glass, pursuant to which goods originated from Vietnam enjoy lower custom duties compared to goods originated from China; and
As advised by LVN & Associates, our Vietnamese legal advisors, as of the Latest Practicable Date, PV glass manufactured in Vietnam was not subject to any anti-dumping or anti-subsidy investigations initiated by the European Commission, the United States and Canada. However, we cannot guarantee that the PV glass produced in Vietnam will not be subject to such investigations in the future. Please see “Risk Factors — Risks Relating to Our Business and Our Industry — Our future plans in the PRC are subject to risks and uncertainties.” for more information.

Our feasibility study covered, among other things, market analysis, production scale, estimation of construction costs and financial impact and key sources of raw materials and energy. In addition, in connection with the feasibility study, we may face numerous potential risks associated with our expansion plan, such as political risk, financial risk and sales risk, primarily because (i) there had been anti-China protests in Vietnam in 2014 when numerous factories owned by PRC nationals or corporations were damaged, looted or destroyed; (ii) once the construction commences, we may face rising construction costs, which will negatively impact our profitability; and (iii) after commercial production begins, we could have falsely gauged market demand, which may lead to difficulties in selling our PV glass products at the prices we anticipated or we may experience longer trade and bills receivable turnover days than we expected. Our PV glass to be manufactured in Vietnam may also be exposed to the risk of being subject to anti-dumping and/or anti-subsidy investigations by the European Commission, the United States and/or Canada, among others. Any of the foregoing could materially and adversely affect our business, results of operation, financial condition and prospects. Please see “Risk Factors — Risks Relating to Our Business and Our Industry — Our future plans in the PRC are subject to risks and uncertainties.”

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Market Analysis

We have considered a number of factors on whether there will be sufficient demand for our PV glass products to warrant the establishment of new PV glass manufacturing facilities in Vietnam according to our expansion plan. First, several PRC and international PV module manufacturers have already set up or planned to set up production facilities in Vietnam, such as Vina Solar Technology Co., Ltd. and Boviet Solar Technology Co., Ltd. Second, a number of international and PRC PV module manufacturers have also set up or planned to establish manufacturing facilities in several other ASEAN countries, such as Hanwha Q CELLS Co., Ltd., First Solar, Inc. and JinkoSolar Holding Co., Ltd. in Malaysia, Trina Solar Limited, Zhongli Talesun Solar Co., Ltd. and JA Solar Holdings Co., Ltd. in Thailand, and Canadian Solar Inc. in Indonesia. Some of these PV module producers are our existing or targeted customers. We believe the establishment of these PV module production facilities will likely drive the demand for PV glass in Vietnam and other parts of Southeast Asia. According to the feasibility study and as far as we were aware, as of the Latest Practicable Date, except for Xinyi Solar Holding Limited, one of our major competitors, which announced in late 2014 that it planned to establish an ultra-clear PV glass plant in Malaysia, no other domestic or overseas PV glass manufacturer having comparable scale or reputation as us has established and operated manufacturing plants in ASEAN member states.

We plan to prioritize our current PRC PV glass production and processing facilities to mainly serve our domestic customers, while our production and processing facilities in Vietnam will be primarily dedicated to serve our customers in Southeast Asia, Europe and India, as well as Korea and Japan. In the event demand for PV glass in China and in these overseas regions becomes uneven, we will adjust our production and processing capacities and allocations accordingly to ensure that overall customer demand can be satisfied.

Raw Material and Energy Procurement

The key raw materials we use to manufacture PV raw glass include ultra-clear silica sand, soda ash, limestone and dolomite. According to the feasibility study, all of such raw materials can be procured from suppliers in Vietnam, and their quality and cost compare favorably with those procured from PRC suppliers. In particular, Vietnam has an abundant supply of low-iron silica sand reserve, the quality of which is superior compared to the silica sand procured in China and the cost of which is approximately 15% to 20% lower than that in China. Since the Vietnamese government has imposed export restrictions on such silica sand, we will likely only be able to enjoy access to it if we establish our PV glass production facilities in Vietnam. We plan to use liquefied natural gas as a primary source of energy for the production of our PV glass in Vietnam to minimize the environmental impact of our operations. According to the feasibility study, the cost of liquefied natural gas in Vietnam is comparable to that in China. Furthermore, Vietnam has ample supply of electricity, the cost of which is generally 15% to 20% lower than the cost of electricity in China, according to the feasibility study.

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Construction Scale and Cost

The construction of the new PV glass production and processing facilities is expected to commence in the third quarter of 2016, which will be completed in the first quarter of 2017. The expected daily maximum production capacity of PV raw glass is expected to be 800 tons and the designed annual processing capacity of PV glass is expected to be approximately 27.0 million sq.m., assuming the rate of PV raw glass (which is the portion of PV raw glass produced that is suitable for further processing into PV glass) is approximately 80% and the rate of finished PV glass products (which is the portion of PV glass that is processed from PV raw glass which is of suitable quality for sale) is approximately 95%. In connection with this expansion plan, we intend to invest an aggregate US$100.0 million, of which approximately [REDACTED]% will be funded by a portion of the net proceeds of the [REDACTED] and the remainder will be funded by our internal working capital. As of the Latest Practicable Date, we had not incurred any capital expenditures for our overseas expansion in Vietnam. The breakdown of the estimated cost is set out below:

Expense category Furnace, machinery and equipment . . . . . . . . . . . . . . . . . . . . . . Building construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Estimated investment amount	Estimated investment amount
		(US$’000) 33,000 22,500 10,000 14,500 20,000 100,000

The breakeven point, which refers to the point at which the revenue generated by the new production and processing facilities equals their operating cost, is expected to be approximately 9.4 million sq.m. of PV glass sold annually, assuming an average selling price of US$4.40 per sq.m. that is estimated with reference to our current average selling price. The payback period, which refers to the period of time required to recover the initial set up costs, assuming the revenue increases in line with our overall business growth and there will be no material adverse impact on the business and operating result of the production and processing facilities due to fluctuation in market demand, inflation, increase in raw material and energy costs and labor expenses throughout the operating period, is expected to be three years after the completion of the construction.

With respect to the location of our new PV glass production and processing facilities, we have considered a number of factors, including, but not limited to, weather, likelihood of earthquake and other natural disasters, quality of construction site, convenience of transportation, adequacy of water, electricity and communication systems as well as the availability of other utilities. As of the Latest Practicable Date, we have not identified the exact location in Northern Vietnam to build our new PV glass production facilities. In the event that the selection of a specific site for our new PV glass manufacturing facilities is finalized after the Listing, we will publish, on a voluntary basis, any further information in this regard in accordance with the applicable Listing Rules. For detailed capital expenditure involved in the construction of the new PV glass manufacturing facilities and our expansion plan, please refer to “Future Plans and Use of Proceeds” in this document.

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Construction Timetable

The preliminary timetable of the construction of our new manufacturing facilities in Vietnam:

2015	2016	2017
Quarter	Quarter	Quarter
1st 2nd 3rd 4th	1st 2nd 3rd 4th	1st 2nd 3rd 4th

Completion of due diligence on investment and construction site . . . . . . . . . . Entering into investment agreement with local government. . . . . . . . . . . . . . Entering into land acquisition agreement with local government. . . . . . . . . . . . . . Construction design . . . . . . . . . Construction . . . . . . . . . . . . . . Placement of equipment order . Equipment installation . . . . . . . Trial production . . . . . . . . . . . . Commencement of commercial production . . . . . . . . . . . . . .

Financial Impact of Our Expansion Plan

We expect that our expansion plan will have the following impact on our operations:

Revenue — When the new production and processing facilities in Vietnam are constructed, we expect to produce and sell approximately 27.0 million sq.m. of PV glass per annum. Assuming the average selling price of our PV glass is US$4.40 per sq.m., our revenue is expected to increase by approximately US$118.8 million per annum.
Cost of sales — As we increase our production and processing volume, our cost of sales is expected to increase by approximately US$90.0 million per annum, assuming raw material costs and energy costs remain relatively stable.
Gross profit and gross profit margin — The gross profit margin is expected to be approximately 24.2%, which is lower than that of the existing PV glass segment primarily due to the fact that new production and processing facilities in the initial operational stage will have lower production and processing efficiency compared to our existing facilities. We intend to improve the gross profit margin of our new Vietnamese production facilities to at least match that of our existing production and processing facilities within 12 months of operation.

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The above financial analysis does not take into consideration numerous investment and tax preferential treatments currently offered by the Vietnamese government. Accordingly, after due and careful inquiry and based on the feasibility study conducted internally, our Directors are of the view that our expansion plan will allow us to capture additional market share overseas, is expected to be profitable in the long term and will likely generate notable economic benefit for our Group.

Management of Vietnamese Operations

Currently, our management does not have any relevant experience in the Vietnamese PV glass market. However, in order to successfully implement our expansion plan and conduct our business operations in Vietnam, we plan to form a management team comprising competent and experienced management staff. Specifically, the management team of our Vietnamese subsidiary will include one general manager, who will be selected from our senior management staff in China. He or she will be based in Vietnam overseeing all aspects of our business operations in the country and providing technical guidance to our manufacturing operations therein. He or she will also be responsible for the technical aspect of the production and processing facilities, the supervision of the construction works relating to the production and processing facilities, and the training of technicians. The general manager will report directly to the Board and our Chairman. He or she will be supported by two or more managers who will be based in China. Our senior management team in Vietnam will also include at least one Vietnamese manager with sufficient management experience in the Vietnamese PV glass industry and will be responsible for exploring business opportunities and establishing or maintaining business relationships with our potential and existing suppliers and customers, as the case may be. While we expect to provide all of the technical guidance and research and development efforts to the Vietnamese subsidiary, it will be managed on a daily basis by our Vietnamese manager(s). Our Vietnamese manager(s) will also be responsible for managing local staff and related human resources matters, and assisting our general manager in the management of the production and processing facilities. In terms of raw material procurement, the procurement department of our Group in Jiaxing will be mainly responsible for the procurement of principal raw materials to be used by our production and processing facilities in Vietnam while the procurement department of our Vietnamese subsidiary will be in charge of procuring auxiliary raw materials. With respect to the sales of the PV glass made in Vietnam, our sales team in China will coordinate the sales efforts involving our glass products to our domestic and overseas customers.

Legal Requirements

LVN & Associates, our Vietnamese legal advisors, has advised us that for us to establish an operating subsidiary in Vietnam and to operate in Vietnam, we are required to obtain certain licenses and permits, such as Government Authorizations, which include Investment Registration Certificate, Enterprise Registration Certificate, Certificate(s) of Right to Use Land and Ownership of Houses and Other Assets Attached to Land, which we do not have any legal impediment to obtain such licenses and permits. Furthermore, we are advised that there are no legal restrictions to (i) establish an operating subsidiary in Vietnam, (ii) establish or acquire PV glass production and processing facilities in Vietnam, or (iii) manufacture and sell PV glass products to our customers in Southeast Asia and elsewhere overseas through the operating subsidiary to be established in Vietnam.

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Furthermore, our Vietnamese legal advisors have advised us that, as of the Latest Practicable Date, (i) there was no on-going anti-dumping or anti-subsidy investigation or other foreign trade regulation or local policy against Vietnamese manufacturers or exporters of PV glasses, cells or modules, and (ii) there was no anti-dumping duty or countervailing duty imposed on Vietnamese-manufactured PV glasses, cells or modules by other countries.

The foregoing represents our expansion plan formulated on the basis of current market and operating conditions, estimated production capacity and forecasted customer demand as of the date of the feasibility study, and may be subject to changes and adjustments as our Directors believe necessary and appropriate. Please see “Risk Factors — Risk Relating to Our Business and Our Industry — Our future plans in the PRC are subject to risks and uncertainties.”

As of the Latest Practicable Date, we have not identified any acquisition target for our expansion in Vietnam. In addition, if the market condition or customer demand changes, such as the possibility that the PV glass produced in Vietnam becomes subject to anti-dumping or anti-subsidy investigations, we may consider other suitable alternative locations to establish our overseas PV glass manufacturing facilities. In the event this occurs, we will voluntarily issue an announcement in accordance with the applicable Listing Rules.

QUALITY CONTROL

We are committed to maintaining a high quality of our products by performing a variety of quality control, inspection and testing procedures throughout our production processes and identify defects and irregularities throughout all stages of production processes. We set forth below our primary quality control measures:

Raw materials — We have a set of written quality requirements for raw materials we procure. We sample check each delivery of fuel and raw materials, including silica sand, soda ash and limestone, before these raw materials enter our warehouse to ensure their quality is in compliance with our requirements.
Production processes — Throughout our glass production processes, we conduct quality control test on the output for every key production stage. Raw materials are regularly monitored to ensure adherence to the prescribed production formula. The condition of, and the activities in, the furnace is also constantly monitored by a computer system and our technical staff. We installed and operated a German glass surface defects inspection system for each of our PV and float glass production lines to monitor the glass quality and identify any defects when the glass is cooled and shaped. Defects identified by such inspection system are further examined manually by our staff to ensure the defective glass will not be processed further and will return to the furnace for re-production. For our household glass and architectural glass products, we have also implemented strict quality control procedures at different stages of processing, including edging, film coating and tempering.

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Finished products — We have on-site staff 24 hours a day, seven days a week, to inspect, on regular intervals, our glass products of its outward appearance and conduct tests to evaluate its performance in accordance with requirements of our customers and various applicable international or industry standards, such as light transmission rate, durability and appearance. Furthermore, we inspect the packaging of each product and sample batches of products before delivery takes place.

Our quality management department devotes significant resources to maintaining and improving the quality of our products. The department hosts monthly meetings to discuss quality issues arising from the production processes and to formulate solutions on potential improvement. As of the Latest Practicable Date, our quality management team consisted of 165 members. In addition, we have implemented and maintained stringent quality control standards and inspection procedures. These standards and procedures are established with reference to various international or industry standards of different products, including the PV glass for solar cell modules (太陽能電池用玻璃) (JC/T 2001-2009), the anti-reflective coated glass for PV modules (太陽能光伏組件用減反射膜玻璃) and the European Standard for glass in building — thermally toughened soda lime silicate safety glass (EN12150-1).

We have been accredited with ISO9001:2008 certification for the quality of our management system, which we have implemented throughout our supply, production and sales processes. In addition, the quality of our products is also recognized through numerous certifications we received. For example, our 3.2mm PV glass has obtained SPF certifications in Switzerland. Based on our industry knowledge, SPF certification is a well-accepted industry certification system and prerequisite by many PV module manufacturers. Furthermore, our PV glass products are tested against hazardous substances as set out in the Restriction of Hazardous Substances (RoHS) Directive 2002/95/EC adopted by the European Union and are RoHS compliant.

During the Track Record Period and up to the Latest Practicable Date, we have not experienced any material losses from product liability.

SUPPLIERS AND RAW MATERIALS PROCUREMENT

For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, the purchases from our five largest suppliers amounted to RMB524.2 million, RMB398.3 million, RMB589.0 million and RMB259.1 million, respectively, representing 44.9%, 25.0%, 30.9% and 29.2%, respectively, of our cost of sales, and purchases from our largest supplier amounted to RMB233.6 million, RMB175.4 million, RMB254.4 million and RMB109.3 million, respectively, representing 20.0%, 11.0%, 13.4% and 12.3%, respectively, of our cost of sales during the same period. During the Track Record Period, we did not experience any difficulty in sourcing energy or raw materials or shortage or delay in the supply of energy or raw materials.

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Our five largest suppliers during the Track Record Period mainly comprised of suppliers of chemicals, fuel and silica sand. We have one to five years of relationship with our five largest suppliers during the Track Record Period. Our Directors have confirmed that except for the supplier of the natural gas we consume, we did not rely on any single supplier for raw materials during the Track Record Period. Please see “— Energy” for more information on the contractual arrangement between us and our natural gas supplier. During the Track Record Period, other than Jiaxing City Yucheng Commerce and Trading Co., Ltd* (嘉興市譽誠商貿有限公司) (“Yucheng”), none of our Directors or their close associates or Shareholders who owned more than 5% of our issued share capital, had any interest in any of our five largest suppliers. To the best knowledge, information and belief of our Directors, Yucheng, one of our top five suppliers for the year ended December 31, 2014, was wholly- owned by Mr. Jiang Jinhua, an executive Director and the spouse of Mr. Ruan Hongliang, our Chairman. Yucheng ceased operations on January 23, 2015 and was subsequently deregistered on May 13, 2015. During the Track Record Period, we primarily acquired soda ash from Yucheng. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we purchased a total of nil, nil, RMB76.0 million and nil of raw materials from Yucheng, respectively, representing nil, nil, 4.0% and nil of our total cost of sales, respectively.

Credit Terms and Payment Method

For the procurement of raw materials, our suppliers generally offer us a credit term of up to 90 days from the time when the goods are received from them and we generally settle our procurement cost by bank transfer or bank acceptance bills.

Raw Materials

Silica sand and soda ash are two major raw materials we consume in the production of our glass products. During the Track Record Period, we purchased silica sand from our external suppliers. We generally enter into legally binding long-term agreements with our silica sand suppliers, a summary of their key terms is set forth below:

Duration ...............................................	Generally ranging from three months to one year
Minimum purchase commitment..............	Based on separate purchase orders
Product price .........................................	As set out in the agreements and supplemental
	agreements
Payment term.........................................	On or before next calendar month end given quantity
	delivered was confirmed and tax invoice provided

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Inspection and product returns...............	We inspect the products according to the quality
	standards as set out in the respective agreement. If
	the product quality is below the prescribed standards
	but within our acceptable range, a discount will be
	applied. If the product quality is outside our
	acceptable range, our supplier is required to arrange
	for product returns
Renewal ................................................	Renewable by mutual consent
Termination............................................	May be terminated by mutual consent

Beginning in January 2015, we purchased certain amount of silica sand for the production of a portion of our float glass from certain of our quartzite ore customers who processed certain amount of quartzite ore extracted from the Mine to float silica sand for us as we do not have any processing and refinement capabilities. We have entered into long-term agreements with these companies. See “— Mining Rights” for more details.

We also typically enter into legally binding long-term agreements with our soda ash suppliers, a summary of their key terms is set forth below:

Duration ...............................................	Generally one year
Minimum purchase commitment..............	Ranges of purchase volume are set	out in the
	agreements and actual purchase volumes are based
	on separate purchase orders
Product price .........................................	Based on separate purchase orders and	in line with
	market conditions
Payment term.........................................	On or before next calendar month	end, given
	quantity delivered was confirmed and	tax invoice
	provided
Inspection and product returns...............	We inspect the product according to	the quality
	standards as set out in the respective agreement. If
	the product quality is below the set standards but
	within our acceptable range, a discount will be
	applied. If the product quality is	outside our
	acceptable range, our supplier shall	arrange for
	product returns
Termination............................................	May be terminated by mutual consent; otherwise,
	the term will be automatically renewed	for one year

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Energy

Energy costs are a major component in our cost of production, which primarily consists of the costs of fuel and electricity. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, the energy costs associated with our production amounted to RMB514.0 million, RMB538.5 million, RMB696.6 million and RMB307.7 million, respectively, representing 41.9%, 34.5%, 35.1% and 36.9%, respectively, of our total cost of production.

During the Track Record Period, we consumed fuel oil, petroleum coke and natural gas as our primary types of fuel for our furnaces. We use these three main types of fuel interchangeably, and consider the prevailing market price of the type of fuel, the environmental impact of the relevant fuel consumption and the applicable PRC laws and regulations on environmental protection when placing purchase orders to minimize our production cost.

We generally enter into legally binding long-term agreements with our energy suppliers. Our long-term agreements with our fuel suppliers do not include minimum purchase quantity or price in order to provide us with more flexibility. We set forth below a summary of the typical key terms of the long-term agreements with our fuel oil and petroleum coke suppliers:

Duration ...............................................	Fixed term of around ten months to one year
Quantity.................................................	May include a set quantity to be supplied by the
	supplier, such as 3,000 tons per month, to be
	delivered every ten days at 1,000 tons each
Price......................................................	Market price. Certain suppliers may be required to
	quote prices approximately three times per month to
	us as reference
Discounts ...............................................	Depends on the supplier. In case the quality is below
	our acceptable range but within a range that we are
	willing to take the order, a discount of RMB50 per
	ton for each of the quality criteria will be applied
Delivery .................................................	Depends on the supplier. Some suppliers may
	deliver to our production facilities and they will
	bear the transportation cost, and other may require
	us to arrange for transportation to pick up from the
	supplier’s facilities
Product returns ......................................	Depends on the supplier. Products could be returned
	if water content is over 1.5% or quality is below our
	acceptable range, or we could reject the delivery if
	we set out the disputed quantity or quality in writing

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Payment terms .......................................	Depends on the supplier. Generally within ten days
	after satisfactory product testing and issuance of
	invoice (including 17% value-added tax) by
	electronic bank transfers or bank acceptance bills
Termination............................................	Depends on the supplier. May be terminated by
	mutual agreement or the agreement may be modified
	by mutual agreement

We also enter into legally binding long-term agreements with our natural gas supplier. We set forth below a summary of the typical key terms of such agreements.

Duration ...............................................	Generally valid until notified by the	natural gas
	supplier in writing
Price......................................................	Based on the ranges of average	daily gas
	consumption as set out in the agreement
Quantity.................................................	Actual gas consumption
Payment terms .......................................	Payment via direct bank debit on a weekly basis
	based on actual weekly gas consumption
Termination............................................	Generally valid until notified by the	natural gas
	supplier in writing. However, the	natural gas
	supplier is entitled to unilaterally terminate the
	agreement by giving us a 30-day prior	notice, when
	it considers the selling price is below	the cost

During the Track Record Period, we procured natural gas from one single supplier as the natural gas we consumed was supplied through exclusive pipelines connected from such supplier to our production facilities. In the event there is any disruption in the supply of one type of energy we consume, we will be required to purchase another type of energy as a substitute. However, this may result in a higher production cost. See “Risk Factors — Risks Relating to Our Business and Our Industry — We consume large amount of fuel and electricity in our production process and any disruption in the supply of fuel and electricity would materially and adversely affect our business, financial condition and operating results.” for more information.

OUR CUSTOMERS

Our PV glass customers are primarily domestic and overseas PV module manufacturers, whereas our float glass customers are primarily domestic and overseas glass processing manufacturers and domestic glass wholesalers. In addition, we sell our household glass products to domestic and overseas furniture manufacturers and processing companies and multinational furniture retailers, and sell architectural glass products to domestic and overseas architectural contractors, domestic architectural glass processing companies and domestic construction companies. Except for our float glass, we generally manufacture our PV glass, household glass and architectural glass products in accordance

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with the purchaser orders we receive from our customers. In addition, some of our household glass customers will typically provide us 12-month rolling forecasts to inform us their anticipated orders throughout the year, which are regularly updated. The table below sets forth a summary of our different type of customers by product type and major products within such category:

Type of product PV glass . . . . . . . . . . . Float glass(1) . . . . . . . . Household glass . . . . . . Architectural glass . . . .	Major product(s) Ultra-clear patterned PV glass Float glass Mirror products, tempered glass for cabinet doors and shelves, and other types glass for household use Tempered glass, insulated glass, Low-E glass, laminated glass and their composite glass products	Main type of customers
		Domestic and overseas PV module manufacturers Domestic and overseas glass processing companies and domestic glass wholesalers Domestic and overseas furniture manufacturers and processing companies and multinational furniture retailers Domestic and overseas architectural contractors, domestic architectural glass processing companies and construction companies

Note:

(1) In addition to selling our float glass directly to our customers, we also sell our float glass to glass wholesalers. See “— Float Glass Customers” in this section for more information.

For the years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015, sales to our five largest customers amounted to RMB412.2 million, RMB546.8 million, RMB831.1 million and RMB425.6 million, respectively, representing 27.7%, 25.0%, 29.3% and 34.4%, respectively, of our total revenue, and sales to our largest customer amounted to RMB130.3 million, RMB190.3 million, RMB222.8 million and RMB179.3 million, respectively, representing 8.8%, 8.7%, 7.9% and 14.5%, respectively, of our total revenue. During the Track Record Period, we had three to eight years of relationship with our five largest customers. During the Track Record Period, none of our Directors or their close associates or Shareholders who, to the best knowledge, information and belief of our Directors who owned more than 5% of our issued share capital, had any interest in any of our five largest customers.

Credit Terms and Payment Method

For the sales of our products, we generally offer a credit term of 30 to 90 days to our customers, or, in the case of certain of our overseas PV glass customers, we offer a credit term as long as 150 days. Our customers generally settle our invoices by bank transfers or bank acceptance bills.

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PV Glass Customers

We generally do not enter into legally binding framework agreements with our PV glass customers unless they require. If we enter into framework agreements with our PV glass customers, these framework agreements usually set out the responsibilities of the parties. We set forth below a summary of the salient terms of the framework agreements that we have entered into with our PV glass customers during the Track Record Period:

Duration ...............................................	Generally one year
Minimum purchase commitment..............	Generally none
Product price.........................................	Generally to be determined and confirmed based on
	separate purchase orders. In some cases, pricing
	terms are set out in the agreement, which will be
	valid for several months and subject to adjustment if
	raw material prices increase or fall by more than
	10%, while in some other cases, during the term of
	the agreement, the prices shall not be higher than the
	maximum purchase price as set out in the
	agreements
Payment term.........................................	30 days after delivery by bank transfers or bank
	acceptance bills
Inspection..............................................	Generally, when the products are delivered to the
	customer’s delivery address, the customer may
	inspect the products, including the specifications,
	amount and quality, within the grace period. If the
	customer has not raised any objection within the
	grace period, we will be deemed to have made
	satisfactory delivery of our products based on the
	sales order
Product returns......................................	If objection has been raised by the customer within
	the grace period, we shall exchange or repair the
	items or arrange for refund as requested by the
	customer
Renewal ................................................	May be renewed by written mutual consent, subject
	to negotiation of new terms one month or three
	months prior to the expiry of the initial term of the
	agreement, as the case may be

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Termination............................................	The termination terms vary among the agreements,
	which generally include the following: The
	customer may terminate the agreement if (i) 5% or
	more of the products within a batch or a delivery are
	defective or a cumulative of 10% of the products are
	defective; (ii) we delay the delivery of goods by
	more than 15 days; and (iii) less than 95% of the
	products we supplied per month are of satisfactory
	quality. The agreement could also be terminated if
	any of the party breaches the terms of the agreement
	or goes into liquidation or unable to repay its debts

We are generally required to be qualified before becoming a supplier of our PV glass customers. See “— Process to Qualify as a Supplier to Our Customers” for more information.

Float Glass Customers

We use a portion of the float glass we manufacture in-house for the processing of our household glass and architectural glass products, and sell the remainder to our glass wholesaler customers and directly to other float glass customers, which mainly comprised of glass processing companies. To the best knowledge, information and belief of our Directors, our glass wholesaler customers will onward sell our float glass products to glass processing companies. Our glass wholesaler customers are not allowed to trade in our name, and to the best knowledge, information and belief of our Directors, none of our glass wholesaler customers was trading in our name.

For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, revenue generated from the sales of float glass amounted to RMB170.6 million, RMB425.3 million, RMB353.8 million and RMB127.0 million, respectively, representing 11.5%, 19.4%, 12.5% and 10.3% of our total revenue, respectively.

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The following table sets forth the number of our float glass customers and their respective contribution to the segment revenue from the sale of float glass for the years or periods indicated based on our internal records:

Type of float glass customers Glass wholesaler customers . . . . . . . . Other customers (1) . . . . Total. . . . . . . . . . . . .	For the year ended December 31, 2012 2013 2014 Number Approximate % of segment revenue Number Approximate % of segment revenue Number Approximate % of segment revenue 52 70.3 75 62.6 52 57.6 42 29.7 70 37.4 82 42.4 94 100.0 145 100.0 134 100.0	For the year ended December 31, 2012 2013 2014 Number Approximate % of segment revenue Number Approximate % of segment revenue Number Approximate % of segment revenue 52 70.3 75 62.6 52 57.6 42 29.7 70 37.4 82 42.4 94 100.0 145 100.0 134 100.0	For the five months ended May 31,
	2012 Number Approximate % of segment revenue 52 70.3 42 29.7 94 100.0	2013 Number Approximate % of segment revenue 75 62.6 70 37.4 145 100.0	2015
			Number Approximate % of segment revenue 34 42.0 47 58.0 81 100.0

Note:

(1) Other customers for the sales of our float glass mainly comprised of glass processing companies.

The percentage of the revenue generated from the sales of our float glass to glass wholesaler customers decreased during the Track Record Period, primarily because we only commenced the production and sales of our float glass in October 2011, and we primarily sold to glass wholesaler customers to reduce sales and marketing expenditure and resources. Our reliance on glass wholesaler customers decreased as this business segment matured and we adjusted our sales strategy accordingly. During the Track Record Period, we only received sale proceeds from our glass wholesaler customers and we did not receive any royalty payments from such customers in connection with our sales of float glass to them. We do not expect the proportion of our total revenue that is attributable to the sales of float glass will significantly increase in the near future.

The following table sets forth the changes in the number of our glass wholesaler customers for the years or periods indicated based on our internal records:

Number of glass wholesaler customers At beginning of the year or period . . . . . . . Increases during the year or period . . . . . . (Decreases) during the year or period. . . . . At the end of the year or period. . . . . . . . .	For the year	For the year	For the year	ended December 31, 2013 2014 52 75 32 11 (9) (34) 75 52	ended December 31, 2013 2014 52 75 32 11 (9) (34) 75 52	For the five months ended May 31,	For the five months ended May 31,
		2012		2013 52 32 (9) 75			2015
		16 36 — 52					52 4(1) (22) 34

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Note:

(1) Two of these new wholesaler customers were our previous wholesaler customers who ceased purchasing float glass from us in 2013 and/or 2014.

The significant increase in the number of our glass wholesaler customers from 2012 to 2013 was mainly attributable to the organic growth of our float glass business since we commenced float glass production and sales at the end of 2011 and significantly increased our float glass production capacity when a new furnace commenced operations at the end of 2012. The number of our glass wholesaler customers decreased in 2014 and 2015 primarily due to our effort to develop sales to the other float glass customers that we believe generally tend to have more stable business relationship with us. Furthermore, we did not actively terminate business relationships with any of our glass wholesaler customers during the Track Record Period. In the foreseeable future, we plan to prioritize the float glass we manufacture in-house to satisfy the demand of our household glass and architectural glass. In the meantime, we will continue to focus on increasing the sales of our float glass to those customers with whom we have had long-term and stable relationships. To the best knowledge, information and belief of our Directors, none of our glass wholesaler customers during the Track Record Period was or operated by any of our ex-employees.

We have entered into legally-binding framework agreements with some of our float glass customers during the Track Record Period, which included certain of our glass wholesaler customers and other float glass customers. For those customers who did not sign any framework agreement with us, such as the remainder of our glass wholesaler customers and other float glass customers, they purchased on a one-off basis according to their demand. The following table sets forth a summary of the key terms of such framework agreements entered into during the Track Record Period:

Pricing ................................................. Selling price is set by us with reference to the prevailing market conditions, while the actual transaction price between the parties thereto is based on the price set out on the delivery note for each batch of products Payment and credit term ........................ Payment prior to delivery Transfer of risks .................................... Ex-factory Minimum purchase quantity .................. Subject to agreement on the price between the parties, the customer commits to purchase certain quantity of glass products on a monthly basis while we are subject to then existing production capacities and quality standards, endeavors to satisfy the aforesaid demand from our customer. However, our Directors confirmed that in practice, such minimum purchase quantity requirement was indicative by nature and was not strictly enforced by us, and there would be no adverse consequence on our glass wholesaler customers for failing to purchase the minimum quantity

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Terms ....................................................	Generally for a period of one year, or up to the end
	of the next year
Termination and renewal........................	Certain framework agreements provide that the term
	will be automatically renewed for	additional
	one-year terms except where one party serves notice
	to the other to terminate the agreements	prior to the
	expiry of the original term, while	some other
	framework agreements provide that the	agreements
	will be terminated upon expiry

These framework agreements did not contain any clauses on (i) geographical or other type of exclusivity granted in favor of our float glass customers; (ii) obsolete stock arrangements; (iii) goods return arrangements; (iv) sales and expansion targets; (v) provision by our float glass customers of sales and inventory reports and estimates to us; and (vi) imposition of retail prices to be charged by our glass wholesaler customers to its customers.

Beginning in April 2015, we have entered into new legally-binding framework agreements with our float glass customers when the original agreements expired. The terms of the new framework agreements are substantially the same as the original framework agreements. The following table sets forth the key terms of the new framework agreements:

Pricing .................................................	Selling price is set by us with		reference	reference	to	the
	prevailing market conditions,	while		the	actual
	transaction price between the		parties		to	the
	agreement is based on the price		set	out	on	the
	relevant sales confirmation
Payment and credit term........................	Payment prior to delivery
Transfer of risks ....................................	Ex-factory
Purchase quantity .................................	The customer’s purchase plan shall		be confirmed			by
	both parties in writing
Terms ....................................................	Generally for a period of one year
Termination............................................	The agreement may be terminated	by mutual			written
	consent

The new framework agreements do not contain any clauses on (i) geographical or other type of exclusivity granted in favor of our float glass customers; (ii) obsolete stock arrangements; (iii) goods return arrangements; (iv) sales and expansion targets; (v) provision by our float glass customers of sales and inventory reports and estimates to us; (vi) minimum purchase amount; (vii) imposition of retail prices to be charged by our glass wholesaler customers to its customers; and (viii) renewal arrangements.

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Our relationship with our glass wholesaler customers is one of buyers and sellers. To the best knowledge, information and belief of our Directors, it is an industry norm for the float glass manufacturers to sell float glass to a group of glass wholesalers and we do not derive any other benefit from selling float glass in this manner. We do not have any control over the distribution by such wholesalers of our float glass products once they are delivered, how these glass wholesalers set the prices of our float glass products, how much stock they should keep, who do they sell to, or which products they will carry. Our sales to our glass wholesaler customers are on normal commercial terms and were negotiated on arm’s length basis, and we generally issue sales confirmations to our glass wholesaler customers, which set out the product prices and quantities. During the Track Record Period, only a small number of our glass wholesaler customers enjoyed a credit term of up to one month. However, beginning in 2015, we required all of our float glass customers, including our glass wholesaler customers, to make full payment before we deliver our float glass products. We also do not provide any guarantee on minimum resale value in favor of our glass wholesaler customers nor are we required to repurchase any of the float glass sold to our glass wholesaler customers under any circumstance. Our glass wholesaler customers cannot return any unsold or obsolete stock to us. In case there are any major quality problems involving the float glass products sold, we will negotiate with our customers for a reasonable discount on the next order rather than for the product to be returned. During the Track Record Period, we did not record any return of unsold or obsolete stock from our glass wholesaler customers. We recognize revenue from the sale of the goods when the significant risks and rewards of ownership have been transferred to the buyer. In this case, revenue is generally recognized when the products are delivered and when the titles are passed.

Our glass wholesaler customers may sell float glass purchased from us as well as from other glass manufacturers. We compete with other float glass manufacturers in the PRC in terms of pricing and quality. We believe that any potential competition among our own products within the same geographical location is small. Hence, we believe supplying our float glass to more than one glass wholesalers in the same vicinity is consistent with industry norm and will not have any material adverse impact on our operations or financial condition.

Household Glass Customers

We entered into a legally binding framework agreement with our large multinational furniture retailer customer to provide our household glass products to it and its designated manufacturers. This framework agreement generally sets out the purchase volumes, payment terms and quality standards. We set forth below a summary of the key terms:

_Duration _	...............................................	Approximately 22 months
_Minimum _	capacity commitment...............	We undertake to have a minimum annual processing
		capacity for each product as set out in the agreement
_Minimum _	purchase commitment .............	Equivalent to 20-feet containers per order. Furniture
		manufacturers will provide forecast estimates each
		month for the next twelve weeks

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Product ..................................................	Mirror glass, tempered glass shelves and door
	furniture components
Product price .........................................	As set out in the agreement and fixed for an initial
	four months and re-negotiated every four months;
	prices are generally agreed on April 1, August 1 and
	December 1, which will be valid from May 1,
	September 1 and January 1, respectively
Price adjustment ....................................	The parties have the right to re-negotiate the price
	every four months
Security stock ........................................	A quantity of each product must be kept as security
	stock and ready to be shipped to the manufacturers
	within three to seven working days from the receipt
	of the order. The customer undertakes to purchase
	these security stock upon termination of the
	agreement
Product returns ......................................	Only defective items may be returned if notified in
	writing, subject to our inspection within 15 days;
	replacement delivery shall be made at our cost
Warranty ................................................	Limited to defects, which appear within two years
	from the time the products are received by the
	furniture manufacturers, except for defects caused
	by our negligence, in which case, there will be no
	time limit
Renewal ................................................	Renewable for 12 months and to be agreed between
	the parties three months prior to the expiration of
	the term
Termination............................................	Either party may terminate the agreement at any
	time by providing notice to the other party in the
	event of any remediable breach, which has not been
	cured within 30 days after the receipt of notice,
	including repeated delays in delivery, low service
	level, repeated claims, insufficient product quality,
	becoming insolvent or subject to liquidation
Breach of contract .................................	Subject to arbitration as mutually agreed by the
	parties

We are required to be qualified before supplying household glass products to the above customer and its manufacturers. See “— Process to Qualify as a Supplier of Our Customers” for more information.

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Architectural Glass Customers

Our architectural glass customers generally place orders with us as needed. New architectural customers who tend to place larger purchase orders with us may first place a trial order with us to test our products and may even inspect our production facilities. They may also request for trial orders if they require new customized products. During the Track Record Period, we have not entered into any long-term or framework agreements with our architectural glass customers.

Process to Qualify as a Supplier to Our Customers

In order to become a qualified PV glass supplier to our customers, our products and manufacturing facilities must meet their standards. First, our customers will generally require us to provide certificates of our PV glass products, such as SPF certifications, to prove that our products have passed the international standard testing. Then, we will have to provide sample products to these customers so they can perform independent testing to ensure our products will meet their requirements. Once our products have passed such testing, our customers will generally request to visit our production facilities to perform audits. If the production facilities audits are satisfactory, our customers will generally place trial orders. In the event they are satisfied with the trial orders, our customers may subsequently place formal orders with us and we will then become their qualified supplier. After becoming a qualified supplier to our PV glass customers, we are also generally required to pass their annual audits to ensure that our products and production facilities continue to meet their quality standards. Based on our experience, the entire process of becoming a qualified supplier to our PV glass customers will take approximately three to six months to complete. During the Track Record Period, we have passed our customers’ initial audit and subsequent annual audits on our PV glass products and production facilities. For some of our PV glass customers, they will assemble complete sets of the PV modules using our PV glass first and then obtain certification of our products from qualified third parties.

In order to supply household glass products to our large multinational furniture retailer customer and its furniture manufacturers, our household glass products and manufacturing facilities must pass the standards set by such furniture retailer. These standards include, among others, operations, quality control, production capabilities in terms of volume, technical knowhow and quality, and compliance with applicable rules and regulations. Once we passed such standards, our large multinational furniture retailer customer and its furniture manufacturers will place trial orders with us for sample testing. After our household products passed the sample testing, we will then enter into framework agreements with our larger multinational furniture retailer customer to supply household glass products to it and its furniture manufacturers. See “— Our Customers — Household Glass Customers” for more information of the major terms of the framework agreements.

In order for us to continue to be a qualified supplier, the multinational furniture retailer routinely inspects our production facilities and performs annual inspections on our records, including production records, and on our compliance with relevant laws and regulations. During the Track Record Period, we have passed their initial audit and subsequent annual audits on our household glass products and production facilities.

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SALES AND MARKETING

Overview

During the Track Record Period and as of the Latest Practicable Date, our products were marketed and sold in the PRC and overseas. As of May 31, 2015, our sales department had 88 personnel, of whom approximately 75% have college degrees or above. It comprises a PV glass sales team and a float glass, household glass and architectural glass sales team. Our sales department is mainly responsible for formulating our sales and marketing strategies, identifying and developing potential customers and servicing existing customers.

Pricing Policy

The price of our PV glass products is primarily based on negotiations with our customers, taking into consideration marketing conditions, product specifications, supply and demand of comparable products, the size of the purchase orders and our production costs.

As for our float glass, we generally price such products based on our internal pricing guideline, which contains four price categories corresponding to the four grades of our float glass products based on their quality. Our pricing guideline is subject to change from time to time. We take into account marketing conditions, accumulated purchase volume, supply and demand of comparable products and our cost of production.

Regarding our household glass products, we take into consideration the following factors when negotiating with our customers: Processing requirements of our customers, market conditions, supply and demand of comparable products, the size of the purchase orders and our production cost. In addition, with respect to sales related to the large multinational furniture retailer, the price is first set in the framework agreement and may be adjusted every four months based on the terms and conditions of the framework agreements. See “— Our Customers — Household Glass Customers” for more information. During the framework agreement and subsequent price adjustment negotiations, we take into account specifications from the furniture retail customer, supply and demand of comparable products, the size of the purchase order and our production costs.

With respect to our architectural glass products, the price for each order is a result of negotiations with our customers, taking into consideration of processing requirements from our customers, marketing conditions, supply and demand of comparable products, the size of the orders and our production costs.

We usually do not offer any discounts on our products to our PV glass, household glass and architectural glass customers. For our float glass customers, we usually offer a bulk purchase discount for those customers purchasing more than 300 tons of float glass from us on a monthly basis. In addition, customers who pay us in cash would receive a small discount based on the total purchase price. If the float glass we delivered has quality issues, provided that we agree to the quality issue identified by our customers, we will reclassify the relevant batch of the float glass and price it according to such reclassification.

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Marketing and Promotion

Our PV glass sales team directly reaches out to our customers and potential customers, who primarily are PV module manufacturers located in the PRC and overseas, to promote our products. We also attend annual SNEC International PV Power Generation Conference & Exhibition held in China to showcase our new products and to promote and market our Company and our products to our customers and potential customers.

Based on our reputation and broad recognition, our float glass customers generally approach us for the purchase of our float glass products. To maintain our relationships with our existing customers and to attract new customers, our float glass sales team approaches them directly from time to time to secure the sales of our products. As float glass is a generic product and could be substituted with other float glass from other manufacturers, based on our experience, the key factor of marketing and promoting our float glass products is our selling price relative to the quality of the product.

With respect to household glass and architectural glass customers, we typically approach them directly or they contact us voluntarily to secure orders.

To enhance our brand recognition, we also participate in seminars, tradeshows and exhibitions in the PRC or overseas to promote and increase our products’ exposure in the market. In addition, we are involved in industry associations, which we believe provide us with different channels to reach out to potential customers while continuing to strengthen our relationship with existing customers.

After-sales Services, Sales Return Policy and Warranty

We generally maintain a product return and warranty policy. Specific terms of product return and warranty are based on the agreements with, or purchase orders from, our customers. Please see “— Our Customers” in this section for details of product returns and warranty arrangements with the different types of customers.

As for the sales of household glass products to certain of our customers, our after-sales services and warranty are governed by the relevant framework agreements for such sales. See “— Our Customers — Household Glass Customers” for more information.

During the Track Record Period, we did not receive any material product returns or make any large-scale product recalls due to any quality defects, and we did not have any material warranty claims on our products, which would have a material and adverse effect on our business and results of operations.

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INVENTORIES

We actively monitor our inventories, which include raw materials, work-in-progress and finished products. We generally do not keep any PV raw glass in our inventory as we manufacture our PV glass products by order. We only keep float glass as inventory for the production of our household glass and architectural glass. We strive to maintain optimal inventory levels to meet customer demand while managing our working capital requirements. As of December 31, 2012, 2013, 2014 and May 31, 2015, our inventories were RMB258.0 million, RMB200.8 million, RMB308.6 million and RMB225.1 million, respectively. For the years ended December 31, 2012, 2013, and 2014 and for the five months ended May 31, 2015, our inventory turnover days were 60 days, 53 days, 49 days and 45 days, respectively. See also “Financial Information — Description of Selected Consolidated Statements of Financial Position Items — Inventories” for more information on our inventories and inventory turnover days during the Track Record Period.

We monitor our inventory levels and make provisions in accordance with our accounting policy. During the Track Record Period, we had not made any provision of impairment loss of our inventories. We generally keep raw material inventory at levels that we believe are sufficient for about one to two months of production.

RESEARCH AND DEVELOPMENT

We believe strong research and development capabilities are important to ensuring our success and our ability to develop new products. To advance our research and development capabilities and to maintain our market-leading position, we established a strong research and development department comprising over 200 staff, of which over 30 were research specialists as of May 31, 2015, a majority of whom possess university degrees or above. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we have invested RMB59.9 million, RMB66.6 million, RMB129.3 million and RMB44.4 million into research and development, respectively. Our research and development expenses mainly consist of trial production cost of new products at our production facilities, remuneration of our research specialists, costs of glass and raw materials we use in our laboratory testing, and the expenditures on purchasing new equipment or improving existing equipment.

Through our continuous research and development efforts, we have successfully developed technologies that improve the performance of our products. For instance, we developed a PV coating agent and when it is applied, the light transmission rate of our PV glass could increase between 2.0% to 3.0% as compared to regular PV glass without such coating. Based on laboratory testing carried out by an independent testing center, our 3.2mm coated PV glass has a light transmission rate of up to 94.5% as compared to a light transmission rate of approximately 91.8% before the coating is applied. We have included the composition and the production method of this coating agent among one of our patents, “A reflection-reducing and high transmission rate ultra-clear patterned PV glass and its production method”* (一種減反射高透過率鍍膜太陽能超白壓花玻璃及其製造方法). For our current production of PV glass, we use our in-house developed coating agent, which is principally based on this patent with new modifications and improvements.

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Furthermore, as of the Latest Practicable Date, we owned 36 patents in the PRC, of which, 34 were utility model patents and two were invention patents. We are also currently developing three new products registered with the Zhejiang Economic and Information Commission* (浙江省經濟和信息化委員會) as new provincial industrial product development projects, including PV glass and Low-E glass. We believe the development of these new products will expand our product portfolio and be complementary to our growth strategies due to the development of new Low-E glass products and PV glass products.

In addition to our in-house research and development capabilities, we have also collaborated with universities in China during the Track Record Period to exchange technological ideas in PV glass-related technologies.

We plan to expand our research and development efforts by continuing to improve our production technologies, in particular, technologies relating to the anti-reflective coating for PV glass to increase light transmission rate and the Low-E glass coating, and to develop new products such as PV glass with a thickness of under 2.8mm. Furthermore, we also plan to improve the quality of our PV glass by further reducing the rate of defective glass in the production process.

AWARDS, ACCREDITATIONS AND MEMBERSHIPS

We have received certain awards and accreditations since our establishment in recognition of the technological advancement we achieved with respect to our products. The following table sets forth certain of the awards and accreditations we have received:

Year 2015 2014	Award/Accreditation Advanced Exemplary Enterprise for Energy Conservation and Emission Reduction in the Concrete Glass Ceramics Industry of the PRC (全國水泥玻璃陶瓷產業節能減排先進典型企業) Top 30 of the Glass Processing Enterprises in China of the Year 2013 (2013年度中國加工玻璃三十強企業)	Awarding organization China Building Materials Federation * (中國建築材料聯合會), China Concrete Association (中國水泥協會), China Architectural Land Industrial Glass Association (中國建築玻璃與工藝玻璃協會) and China Construction Health Ceramics Association* (中國建築衞生陶瓷協會) China Architectural and Industrial Glass Association	Awarded product/entity
			Our Company Our Company

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	Year 2013 2013 2010 2010 2010	Award/Accreditation Advanced Entity in the National Building Materials Industry (全國建材行業先進集體) Advanced Entity in the Zhejiang Key Construction Project Competition (浙江省重點建設立功競賽先進集體稱號) Third Prize in Shanghai Science and Technology Award (上海市科學技術獎) First Prize in National Building Materials Industry Technological Innovation Award (全國建材行業技術革新獎) Gold Prize	Awarding organization Ministry of Human Resources and Social Security of the People’s Republic of China* (中華人民共和國人力資源和社會保障部), and China Building Materials Federation The People’s Government of Zhejiang Province (浙江省人民政府) Shanghai People’s Government (上海市人民政府) China Building Materials Federation and China Machine and Metallurgy Building Materials National Committee (中國機冶建材工會全國委員會) China International Patent & Brand Expo Organizing Committee (中國國際專利與名牌博覽會組織委員會) and China International Patent & Brand Expo Accreditation Committee (中國國際專利與名牌博覽會評審委員會)	Awarded product/entity
				Our Company Our Company Technological development in ultraviolet ray-blocking ultra-clear patterned PV glass Ultra-clear patterned PV glass Ultraviolet ray-blocking ultra-clear patterned PV glass

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	Year 2008	Award/Accreditation National Key New Product	Awarding organization Ministry of Science and Technology of the PRC (中華人民共和國科學技術部), Ministry of Environmental Protection of the PRC (中華人民共和國環境保護部), Ministry of Commerce of the PRC (中華人民共和國商務部) and General Administration of Quality Supervision, Inspection and Quarantine of the PRC (中華人民共和國品質監督檢驗檢疫總局)	Awarded product/entity
				Ultra-clear patterned PV glass

Our Company has also been invited to become a member or a committee member of certain professional associations for glass products or PV products. The following table sets forth some of the seats that we currently hold:

Office or membership
Member . . . . . . . . . . . . . . .
Member . . . . . . . . . . . . . . .
Vice President . . . . . . . . . .
Deputy Director . . . . . . . . .
Standing Vice President
. .
Member . . . . . . . . . . . . . . .
President . . . . . . . . . . . . . .

Organization

China Architectural and Industrial Glass Association
Material Branch of Building Curtain Wall Specialized Committee
(建築幕牆專業委員會材料分會)
of
Shanghai
Decoration
and
Fitment Association (上海裝飾裝修行業協會)
Zhejiang Provincial Glass Industry Association (浙江省玻璃行業
協會)
PV Glass Specialized Committee of China Architectural and
Industrial Glass Association
Jiaxing PV Industry Association (嘉興市光伏行業協會)
Zhejiang Building Materials Association (浙江省建材工業協會)
Jiaxing Xiuzhou District New Energy Industry Association (嘉興
市秀洲區新能源行業協會)

COMPETITION

We are a global PV glass manufacturer based in the PRC and we face competition from domestic and overseas PV glass manufacturers. The market concentration for PV glass is high as the top five PV glass producers in the PRC accounted for approximately 80.4% of the total sales revenue in the PRC in 2014, of which, the top two PV glass producers in the PRC, including our Group, accounted

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for approximately 50% of the total sales revenue, according to the Frost & Sullivan Report. Based on our operating experience, we believe the principal competitive factors in our relevant markets include:

quality of PV glass, including, among other things, light transmission rate and durability;
selling price;
production cost;
production scale, including production and processing capacities;
technological and innovative capabilities;
customer services and reputation; and
geographical location.

There are certain major barriers of entry to the PV glass industry, including substantial capital investment required to set up the operations, high product quality requirements from customers, product certifications requirements, larger scale production to achieve economies of scale, established relationships with customers and regulatory approvals. Please see “Industry Overview — Analysis of PV Glass Market — Competitive Analysis” for further details on the competition we face including the key players in the PV glass industry. In addition, our business also faces a number of risks relating to market competition. See “Risk Factors — Risk relating to Our Business and Our Industry — We face significant competition in the PV glass industry market, which could materially and adversely affect our profitability.” for more information.

MINING RIGHTS

In order to secure a stable supply of quality silica sand for our float glass production, our wholly-owned subsidiary, Anhui Flat Materials (the “Purchaser”) entered into a mining rights agreement with Chuzhou City Bureau of Land Resources (the “Seller”) (滁州市國土資源局) dated April 13, 2011, pursuant to which the Purchaser obtained the extraction right to the seventh segment of a quartzite mine located at the Lingshan-Mujishan mining zone in Fengyang County, Chuzhou City, Anhui Province, the PRC (中國安徽省滁州市鳳陽縣) for a consideration of RMB226.6 million.

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We set forth below a summary of the key terms of the mining rights agreement for the Mine:

Location of the Mine ................ No. 7 glass production use quartzite mine, Lingshan-Mujishan mining zone, Fengyang County, Chuzhou City, Anhui Province, the PRC
Area of the Mine ........................ 0.1102 sq.km. Consideration ............................ RMB226,600,000 Payment terms .......................... (i) 50% of the consideration, equivalent to RMB113,300,000, to be paid before April 23, 2011;
(ii) 25% of the consideration, equivalent to RMB56,650,000, to be paid before April 23, 2016;
(iii) 25% of the consideration, equivalent to RMB56,650,000, to be paid before April 23, 2021;

plus, interest on the outstanding balance of the consideration at a rate not less than the prevailing lending rate of PBOC; and

(iv) In the event the Purchaser fails to pay the purchase price as set out in the mining rights agreement, the Seller has the right to withdraw the mining right and the Purchaser shall bear any financial loss caused to the Seller.

In the event of delay in payment, an overdue fine of 0.2% shall be paid from the date on which the payment is due

Minimum extraction quantity .... Not less than 500,000 tons per year Designed service period ............. 31 years Duration of mining right ............ To be determined based on the mining permit Other obligations ....................... The Purchaser shall invest at the place of the Mine within four years from the date of obtaining the mining rights, a large scale glass or processed glass company, as provided in the Large, Medium and Small Sized Industrial Enterprises Division Standards* 《大中小型工業企業劃分標準》( ) issued by the National Bureau of Statistics of the PRC (中華人民共和國國家統計局) (the “Other Obligation”)

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As advised by our PRC Legal Advisors, the mining rights of Anhui Flat Materials will not be affected even if Anhui Flat Materials fails to invest in a large-scale glass or processed glass company by August 12, 2016 in accordance with the Other Obligation. Our PRC legal advisors’ view was arrived on the basis that (i) pursuant to the Notice on the Restriction to Impose Matters Related to Business Autonomy as Prerequisites to Investment Projects Approvals for Enterprises* 《關於一律不( 得將企業經營自主權事項作為企業投資項目核准前置條件的通知》) jointly issued by NDRC and the State Commission Office for Public Sectors Reform of the PRC (中央機構編制委員會辦公室) on December 31, 2014, for all matters within the business autonomy of enterprises, such matters shall not be prerequisites to approve investment projects, and such clauses are deemed invalid; (ii) the notice referred to in (i) above is also applicable to subsisting agreements entered into before December 31, 2014; (iii) the clause relating to Other Obligation in the mining rights agreement is the type of clause prohibited by the notice referred to in (i) above and therefore, is deemed invalid; and (iv) according to an interview carried out with the Seller in February 2015, which is also the competent authority that granted us the relevant mining permit, as advised by our PRC Legal Advisors, in the event that Anhui Flat Materials fails to invest in the establishment of a large scale glass or processed glass company within the time period stipulated in the agreement (i.e., by August 12, 2016), the mining permit of Anhui Flat Materials will not be revoked by the Land and Resources Department of the PRC.

We set forth below a summary of our mining permit for the Mine:

Name of certificate	Number	Issuing department	Mining right owner	Name of mine	Validity	Extraction method	Area (square kilometers)	Mining limit	Production scale
Mining Permit of the PRC	C3400002012087130127089	Anhui Province Land and Resources Department of the PRC	Anhui Flat Materials	Lingshan-Mujishan No. 7 quartz mine project (靈山-木屐山礦區玻璃專用石英岩礦7號段)	22 August 2012 to 22 August 2022	Open pit mining	0.1104	185.2 m to 80 m above sea level	1,500,000 tons per year

As advised by our PRC Legal Advisors, as of the Latest Practicable Date, we have obtained the requisite approvals, licenses and permits for our mining activities in all material aspects, including the mining permit and the production safety permit. As advised by our PRC Legal Advisors, upon the expiration of our mining permit, pursuant to the applicable PRC law, Anhui Flat Materials shall satisfy requirements such as having fully settled the considerations for the Mine, either having obtained the confirmation of acceptance of land rehabilitation examination or payment confirmation for land rehabilitation, and holding a valid mining license for the renewal, and there is no legal impediments in our application to renew our mining permit. At the current pace of extraction under the mining permit, we expect all of the quartzite at the Mine will be depleted before the expiry of the mining permit. In the event that we apply for an extension of our mining permit, as of the Latest Practicable Date, our Directors do not foresee any material obstacle in complying with the above requirements for the renewal of the mining permit and hence, our Directors believe that we will be able to renew our mining permit.

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During the Track Record Period, we engaged Chuzhou Langyashan Mining Constructions Technology Co., Ltd.* (滁州琅琊山礦業工程技術有限公司) (“Chuzhou Langyashan”), an Independent Third Party, to drill and to blast the relevant areas of the Mine in connection with the extraction work. We commenced our outsourcing relationship with Chuzhou Langyashan in September 2013, who held the necessary qualification for blasting. We set forth below a summary of the legally binding agreement we entered into with Chuzhou Langyashan:

Duration and renewal ................ One year and automatically renewable for another year upon expiry
Services .................................... Chuzhou Langyashan to provide drilling and blasting work at the Mine
Anhui Flat Material’s Anhui Flat Materials shall, among other things, provide an onsite responsibilities ...................... supervisor to liaise blasting related matters
Chuzhou Langyashan’s Chuzhou Langyashan shall, among others: responsibilities ......................
draft the blasting work and design plan and emergency plan;
arrange for approvals for blasting and purchasing flammable products, and procure, transport and store the flammable products;
follow Anhui Flat Materials’s instructions in arranging for blasting work and be responsible for the result of the blasting work;
purchase accident insurance for all blasting workers and follow the Blasting Safety Procedures * 《爆破安全規程》( ) (GB6722-2011) and the Civil Explosives Safety Regulations * 《民用爆炸品安全管理條例》( ) in the PRC; and
be responsible for blind gun and blasting accident handling, including all fees and safety related responsibilities
Price ........................................ Depending on the amount of blasting work based on the agreed measurement of 2.62 tons per cubic meter at RMB11.266 per cubic meter, which excludes mining technical service fees. In the event there is a large difference in the amount calculated, an authoritative company will be engaged to perform the measurement
Indemnity and liquidated • Anhui Flat Materials has the right to claim against Chuzhou damages ................................. Langyashan all damages from blind gun and blasting work accidents

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	•	If the result of the blast does	not satisfy the quality
		requirement (boulder yield to be less than 10%, 90% of the
		length of the ore to be less than	20 centimeters, and the
		blasting depth shall not be less than 90% of the depth of the
		design pit), Chuzhou Langyashan	shall pay RMB5,000 to
		Anhui Flat Materials as liquidated	damages, and after three
		incidents, Anhui Flat Materials has	the right to terminate the
		agreement
	•	If any of the staff of Chuzhou Langyashan does not follow
		the orders of the onsite supervisor	of Anhui Flat Materials,
		Chuzhou Langyashan shall pay	RMB500 as liquidated
		damage
Invoicing....................................	Every 15th day of the calendar month
Payment method.........................	Bank	transfer
Termination................................	Either party may provide written notice to the other party one
	month before the expiry for not renewing the agreement.

We generally will set the production plan for our contractors, and their work will be monitored by our management in Anhui to ensure adherence to the plan. When we make the production plan, we take into account matters such as safety issues, production output, costs and the relevant laws and regulations. We believe with our production plan and the supervision of the works of our contractors, we are able to adequately manage our operations at the Mine.

Since we do not have any quartzite ore processing and refinement capabilities, we generally sell the quartzite ore extracted from the Mine to our customers who are able to process and refine it into silica sand. We have arrangements in place with these customers pursuant to which they agree to sell us, but we are not obligated to purchase from them, the amount of the silica sand we need in connection with the production of our float glass if the silica sand meets our standards. We have entered legally binding agreements with these customers, a summary of their key terms is set forth below:

Duration and renewal ...........................	From the date of the agreement to December 31,
	2016 and automatically renewable for one year upon
	expiry if the parties do not object
Price......................................................	Price of the quartzite ore to be sold by Anhui Flat
	Materials will depend on the market price and to be
	confirmed by the end of the month based on the
	quality of the ore
Payment term.........................................	The customer shall settle the payables by the end of
	the next calendar month after receipt of the sales
	invoice

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_First _	_right _	_of _	refusal ..............................	If the silica sand processed from the quartzite ore
				attains the quality required by Anhui Flat
				Materials’s headquarters, such silica sand shall be
				supplied to Anhui Flat Materials’s headquarters, and
				terms for such sales, such as price and payment
				terms, shall be agreed to and contracted with Anhui
				Flat Materials’s headquarters separately

Based on the actual amount of quartzite ore refined into silica sand by the main purchaser of quartzite ore for the fourth quarter of 2014, we estimate that approximately 0.5 kilograms of float silica sand can be processed and refined from each kilogram of quartzite ore. Therefore, it is anticipated that we will extract 1,500,000 tons of quartzite ore each year and approximately 750,000 tons of float silica sand will be refined from quartzite ore extracted from the Mine.

Beginning in November 2012, Anhui Flat Materials commenced the construction of the roads and mining facilities at the area of the Mine and passed the relevant governmental inspection and acceptance in September 2014. As by-products of such construction, certain amount of quartzite ore was extracted from the surface of the Mine. We sold certain amount of quartzite ore extracted from the Mine to third parties in 2013 and 2014. Beginning in January 2015, we used certain amount of the silica sand processed and refined from the quartzite ore that is extracted from the Mine for the production of our float glass. Since we do not have processing and refinement capabilities, we have made arrangements with certain of our customers pursuant to which we sell quartzite ore to them for processing and we have a priority to purchase the processed silica sand if it meets our requirements. During the Track Record Period, we did not recognize the sales of quartzite ore and the purchases of silica sand from our customers who processed our quartzite ore on a net basis because (i) we sold our quartzite ore to these customers at market price; (ii) we have a priority rather than an obligation to purchase, at our discretion, the silica sand processed from our quartzite ore if its quality meets our requirements; and (iii) these customers sold the silica sand to us at market prices. As such, we did not purchase all of the silica sand processed from the quartzite ore we sold to these customers and have only purchased part of the silica sand processed by them from our quartzite ore. Therefore, the sales of quartzite ore and the purchases of silica sand from our customers who process our quartzite ore were separate transactions. We expect this relationship with our quartzite ore customers to continue in the foreseeable future. Since January 2015, we purchased certain amount of silica sand processed by our quartzite ore customers for our float glass production. We may gradually use more of the silica sand refined from the quartzite ore of the Mine if more quartzite ore with suitable quality can be extracted in the future. Notwithstanding that the Mine is expected to contribute a certain proportion of silica sand necessary for our internal production use, we expect to retain third-party suppliers for silica sand to complement and stabilize the supply we need whenever necessary.

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The table below sets forth the extraction rate and production rate of the Mine during the Track Record Period:

Approved annual extraction amount (tons) . Amount of quartzite ore extracted (tons). . . Extraction rate(1) (%) . . . . . . . . . . . . . . . . . Amount of quartzite ore sold to third parties (tons) . . . . . . . . . . . . . . . . . . . . . Average selling price (RMB) . . . . . . . . . . .	For the year ended December 31, 2012 2013 2014 1,500,000 1,500,000 1,500,000 — 169,600 664,300 — 11.3 44.3 — 14,553 665,753 — 15.38 16.55	For the year ended December 31, 2012 2013 2014 1,500,000 1,500,000 1,500,000 — 169,600 664,300 — 11.3 44.3 — 14,553 665,753 — 15.38 16.55	For the five months ended May 31,
	2012 1,500,000 — — — —	2013 1,500,000 169,600 11.3 14,553 15.38	2015
			1,500,000 918,100 63.4 947,180 20.59

Note:

(1) Equals the amount of quartzite ore extracted divided by the approved annual extraction amount.

For the year ended December 31, 2012, 2013, 2014 and the five months ended May 31, 2015, Anhui Flat Materials recorded loss of RMB6.0 million, RMB6.1 million, RMB13.1 million and a profit of RMB2.1 million, respectively. During the Track Record Period, our extraction costs (including the amortisation of the mining rights) of the Mine amounted to nil, RMB0.3 million, RMB17.0 million and RMB12.1 million for the years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015, respectively. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, our operating costs of the Mine amounted to RMB8.0 million, RMB8.0 million, RMB8.6 million and RMB3.0 million, respectively. Our sales of quartzite ore to third parties amounted to nil, RMB0.2 million, RMB11.0 million and RMB19.5 million, respectively, with an average selling price of nil, RMB15.38 per ton, RMB16.55 per ton and RMB20.59 per ton, respectively, for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, based on our internal records. The average selling price of our quartzite ore gradually increased as the quality of the ore gradually improved for the same periods. Although Anhui Flat Materials recorded losses for the years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015, primarily due to the construction of the roads and mining facilities at the area of the Mine, and at the initial production stage of the Mine that the extracted quartzite ore was of a lower quality, which commanded a lower average selling price, we believe as we extract quartzite ore from deeper layer of the Mine, the quantity and quality of quartzite ore we extract will increase or improve, and the revenue generated from the sales of quartzite ore will increase with improving margins as well. As such, we believe that the Mine is favorable to our operations and the results of our Group in the medium- to long-term.

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Listing Rules Implications

According to Rule 18.01(3) of the Listing Rules, a “Mineral Company” is defined as “ a new applicant whose Major Activity (whether directly or through its subsidiaries) is the exploration for and/or extraction of Natural Resources � ” and “Major Activity” is defined as “ an activity of an issuer and/or its subsidiaries which represents 25% or more of the total assets, revenue or operating expenses of the issuer and its subsidiaries. Reference should be made to the issuer’s latest audited consolidated financial statements. ”

As of May 31, 2015, all mining activities of the Mine was carried out by Anhui Flat Materials, which was principally engaged in the operation of the Mine and the sales of quartzite ore extracted from the Mine. Based on the brightline test and our latest audited financial information for the five months ended May 31, 2015, the total assets, total revenue and operating expenses of Anhui Flat Materials was less than 25% of our total assets, total revenue and operating expenses, respectively. Our Company is therefore not a “Mineral Company” under Chapter 18 of the Listing Rules.

Our Directors confirm that if we will become a “Mineral Company” under Chapter 18 of the Listing Rules based on the brightline test after Listing, we will follow the continuing obligations under Rule 18.14 to 18.17 of the Listing Rules. See “Risk Factors — Risk relating to Our Business and Our Industry — We may become a mineral company under Chapter 18 of the Listing Rules in the future.”

THE INDEPENDENT TECHNICAL REPORT

Preparation of the Independent Technical Report

In February 2015, we instructed the Independent Technical Consultant to prepare an Independent Technical Report on the Mine according to the JORC Code standards. The Independent Technical Report is an independent technical review of the mineral resources of the Mine. The scope of work of the Independent Technical Consultant in preparing the Independent Technical Report on the Mine included data collection, analysis, site visits, technical work and preparation of the Independent Technical Report. The Independent Technical Report was based on data provided to the Independent Technical Consultant by us. In the opinion of the Independent Technical Consultant, we provided open access to all records necessary to enable a technical assessent of the Mine and resource estimates. We warranted in writing to the Independent Technical Consultant that full disclosure was made of all material information and that, to the best of our knowledge and understanding, such information was complete, accurate and true.

The Independent Technical Consultant reviewed, among others, a detailed geology and resource estimation report on the Mine dated June 2010 (the “Resource Estimation Report”), a preliminary mine design report of the Mine dated November 2012 (the “Preliminary Mine Design Report”), an updated resource report in January 2015, a survey report prepared by the Land and Resources Bureau of the PRC in June 2015, associated maps and data, together with further data collected by the Independent Technical Consultant during site visits, which collectively formed the basis for the review of the Mine by the Independent Technical Consultant in preparing the Independent Technical Report. The Independent Technical Consultant acquired additional relevant materials independently from a variety of sources, which were used to expand on the information provided by us and, where appropriate,

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confirmed or provided alternative assumptions to those made by us. The Competent Persons also relied on opinions and technical works of the authors of the Preliminary Mine Design Report, which we provided. The Competent Persons obtained all of the information included in the Independent Technical Report from us or from public sources.

Summary of the Independent Technical Report

For an executive summary of the Independent Technical Report, See “Summary of the Independent Technical Report” in Appendix III to this document. We also set forth below a summary of the Independent Technical Report.

Resource Estimates

According to the Independent Technical Report, the quartzite at the Mine is bulk industrial mineral, which covers an area of about two-thirds of the Mining Permit and down to the base of the Mining Permit at 80 meters above sea level, and is potentially economic. The quartzite at the Mine is considered pure having impurities of minor amount of iron and alumina. The quartzite is sedimentary in origin but has undergone high grade metamorphism since deposition. The rock is Mid-Proterozoic in age, belonging to the upper member of the Baiyunshan Unit of the Fengyang Group.

The Independent Technical Consultant noted that in the Resource Estimation Report, the total tonnage of glass-use quartzite within the Mining Permit was 18,167,000 tons with average major chemical composition of 98.76% silicon dioxide (SiO2), 0.312% aluminum oxide (Al2O3), 0.074% iron oxide (Fe2O3), 0.0109% titanium dioxide (TiO2) and 0.0007% chromium (III) oxide (Cr2O3). The Independent Technical Consultant further noted that no mine or process plant recovery factors were applied to these estimates, and appropriate quality controls, procedures and assurance were used. The Independent Technical Consultant assayed the samples collected from the Mine during site visits and observed that such samples returned results of silicon dioxide (SiO2), aluminum oxide (Al2O3) and iron oxide (Fe2O3) within the range of values contained in the Resource Estimation Report and Preliminary Mine Design Report, and found that the estimates as set out in the Resource Estimation Report complied with JORC Code standard for the material within the Mining Permit.

The Independent Technical Consultant was supplied with the topography, drill and trench assays and undertook a full three dimensional check on the resource estimate using Ordinary Kriging methods for silicon dioxide (SiO2), aluminum oxide (Al2O3) and iron oxide (Fe2O3). The findings by the Independent Technical Consultant were in close agreement with and confirmed the resource estimate in the Preliminary Mine Design Report.

According to the PRC standards of classifications of industrial glass-use quartzite index, when the silicon dioxide (SiO2) is greater than or equal to 96% , aluminum oxide (Al2O3) is less than or equal to 2% and iron oxide (Fe2O3) is less than or equal to 0.33%, such quartzite are suitable for glass production. According to the Independent Technical Report, the various groups of ore at the Mine

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generally fulfill the requirements of industrial index of detailed geological investigations where silicon dioxide (SiO2) is approximately 99% with little aluminum oxide (Al2O3) and iron oxide (Fe2O3), and the lithology of rock is mainly quartzite, with some muscovite bearing quartzite. Hence, most of the orebody at the Mine is classified as glass-producing quartzite.

The following table sets forth the resource estimate by resource category of the Mine as of May 31, 2015:

Element Measured(1) . . . . . . . . . Indicated(2) . . . . . . . . . Inferred(3) . . . . . . . . . . Total . . . . . . . . . . . . . .	Amount (million tons) — 7.9 4.1 12.0	Silicon dioxide (SiO2) (%) — 98.79 98.69 98.76	Aluminum oxide (A12O3) (%) (ppm) — — 0.325 3,250 0.283 2,830 0.312 3,120	Iron oxide (Fe2O3)
				(%) (ppm) — — 0.069 690 0.083 830 0.074 740

Notes:

The Independent Technical Consultant found the estimates in the table above to be in close agreement with its estimates of the total remaining resources within the pit limits after allowance for surface, pre-mine and past production, being 12,200,000 tons, and the average major chemical composition was 98.76% silicon dioxide (SiO2), 0.305% aluminum oxide (Al2O3) and 0.064% iron oxide (Fe2O3).
(1) A measured mineral resource is that part of a quartzite resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with confidence sufficient to allow the application of “modifying factors” (which are considerations used to covert mineral resources to “ore reserves,” defined as the economically mineral part of a measured and/or indicated mineral resource, according to the JORC Code. These include, but not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors) to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to confirm geological and grade (or quality) continuity between points of observation where data and samples are gathered.
(2) An indicated mineral resource is that part of a quartzite resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of “modifying factors” in sufficient detail to support detailed mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to assume geological and grade (or quality) continuity between points of observation where data and samples are gathered.
(3) An inferred mineral resource is that part of a quartzite resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

Furthermore, the Independent Technical Consultant concluded that the iron content of the ore may cause beneficiation costs to rise in order to produce a product that will meet the requirements of PV glass or float glass production, which may materially affect the mineral resource estimate.

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In terms of the expected life of the Mine, the Independent Technical Consultant noted that in the Preliminary Mine Design Report, the life of the Mine was stated as ten years. The following tables sets forth the life of the Mine production plan for silicon dioxide and iron oxide:

==> picture [429 x 160] intentionally omitted <==

----- Start of picture text -----

Life of Mine Production Plan Life of Mine Production Plan
Silicon Dioxide (SiO2) [(1)(2)(3)] Iron Oxide (Fe2O3) [(1)(2)(3)]
Tons (’000) SiO2 (%) Tons (’000) Fe2O3 (ppm)
1,600 99.10 1,600 800
1,400 99.00 1,400 700
1,200 98.90 1,200 600
1,000 1,000 500
98.80
800 800 400
98.70
600 600 300
400 98.60 400 200
200 98.50 200 100
0 98.40 0 0
resource resource
mined mined
lost at...premineyear 1year 2year 3year 4year 5 year 6year 7year 8year 9year 10 silicon dioxide lost at...premineyear 1year 2year 3year 4year 5 year 6year 7year 8year 9year 10 iron oxide
----- End of picture text -----

Notes:

(1) Based on our schedule provided to the Independent Technical Consultant.
(2) Based on 55 degrees pit walls, a base at 80 meters above sea level and after allowance for 88% mining tonnage recovery.
(3) No mining factors have been applied to the in situ grade estimates for mining dilution or loss as a result of the grade control or mining process. No metallurgical factors have been applied to the in situ grade estimates.
Source: The Independent Technical Report

Location and Access

The Lingshan-Mujishan mining area is located to the west of the southern mountain range of Fengyang County, Anhui Province, the PRC. It is about 20 km to the south of the Fengyang County and 35 km from Bengbu City. The administration of the area is under Damiao city of Fengyang County. The tenement is 0.1104 sq. km. in area.

The Lingshan-Mujishan mine area contains 18 mining permits and the Independent Technical Report is relating to the Mining Permit for area numbered 7.

Risk Assessment

The Independent Technical Report categorized risks into the following categories:

(i) Major risk : The factor poses an immediate danger of a failure which, if uncorrected, will have a material effect (>15% to 20%) on the project cash flow and performance and could potentially lead to project failure.
(ii) Moderate risk : The factor, if uncorrected, could have a significant effect (10% to 15%) on the project cash flow and performance unless mitigated by some corrective action.

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(iii) Minor risk : The factor, if uncorrected, will have little or no effect (<10%) on project cash flow and performance.

The likelihood of a risk event occurring within seven years has been considered as either (i) likely, which means will probably occur; (ii) possible, which means may occur; or (iii) unlikely, which means unlikely to occur. The degree or consequence of a risk and its likelihood were combined into an overall risk assessment as illustrated below:

Likelihood of risk (within seven years) Likely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Possible. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unlikely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Consequence of risk	Consequence of risk	Consequence of risk
	Minor Medium Low Low	Moderate High Medium Low	Major
			High High Medium

The Independent Technical Report identified four types of risks relating to the Mine: Mineral resource risk, mining risk, product price risk and production target risk. The following table sets forth a summary of the risk assessment of the Independent Technical Consultant:

Risk issue/Likelihood/Consequence Mineral resource Geology: ore body interpretation . . . Lack of understanding of geological controls . . . . . . . . . . . . . . . . . . . . Mineralization may not extend to depth . . . . . . . . . . . . . . . . . . . . . . Grade capping . . . . . . . . . . . . . . . . . Incorrect resource estimate methodology distorts the grade tonnage curve . . . . . . . . . . . . . . . . Resource confidence . . . . . . . . . . . . Operational risk Significant production shortfalls . . . Adverse weather conditions . . . . . . . Openpit wall failure . . . . . . . . . . . . . Economic conditions Product price . . . . . . . . . . . . . . . . . . Environmental Tailing storage facility overflow . . .	Likelihood Unlikely Unlikely Unlikely Unlikely Unlikely Unlikely Possible Likely Unlikely Possible Unlikely	Consequence rating Risk Moderate Low Moderate Low Moderate Low Moderate Low Moderate Low Moderate Low Moderate Low Minor Low Moderate Low Minor Low Minor Low	Comment and possible mitigation
			— — — — — — — — — All products can be either sold to third parties or used in our production. —

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Risk issue/Likelihood/Consequence Capital and operating costs Project timing delays . . . . . . . . . . . . Capital cost increase . . . . . . . . . . . . Operating costs underestimated significantly . . . . . . . . . . . . . . . . . Licensing and permitting . . . . . . . . . Project implementation Critical path delays . . . . . . . . . . . . .	Likelihood Unlikely Unlikely Unlikely Unlikely Unlikely	Consequence rating Risk Moderate Low Moderate Low Minor Low Moderate Low Moderate Low	Comment and possible mitigation
			— — — — —

Limitations on the Independent Technical Report

Geological information usually consists of a series of small points of data on a large blank canvas, and the true nature of any body of mineralization is not known until the last ton of ore has been mined out, by which time exploration has long since ceased. Exploration information relies on interpretation of a relatively small statistical sample of the deposit being studied. Thus, a variety of interpretations may be possible from the fragmentary data available. Investors should note that the statements and diagrams quoted from the Independent Technical Report are based on the best information available at the time, but may not necessarily be absolutely correct. Such statements and diagrams are subject to change or refinement as new exploration makes new data available, or new research alters prevailing geological concepts. Appraisal of all the information mentioned above forms the basis for the Independent Technical Report. The views and conclusions expressed are solely those of the Independent Technical Consultant. When conclusions and interpretations credited specifically to other parties are discussed, then those are not necessarily the views of the Independent Technical Consultant.

Qualification of the Competent Persons

The information in the Independent Technical Report that relates to resources at the Mine is based on information compiled by Andrew Vigar, who is a fellow of the Australian Institute of Geoscientists, and Glenn Sheldon, who is a fellow of The Australasian Institute of Mining and Metallurgy. Andrew Vigar and Glenn Sheldon are both employed by Mining Associates Ltd. Andrew Vigar and Glenn Sheldon have sufficient experience which is relevant to the style of mineralization and type of deposit under consideration in the Independent Technical Report and to the activity which he is undertaking to qualify as a “Competent Person” as defined in the JORC Code.

Independence of the Independent Technical Consultant and the Competent Persons

The Independent Technical Consultant confirmed that neither they nor any of the Competent Persons have any material existing or contingent interest in the outcome of the Independent Technical Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of the Independent Technical Consultant.

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The Independent Technical Consultant confirmed that they have no prior association with our Company in relation to the mineral assets that are the subject of the Independent Technical Report. The Independent Technical Consultant further confirmed that they have no beneficial interest in the outcome of the technical assessment conducted in connection with the preparation of the Independent Technical Report which is being capable of affecting its independence. We are contracted to pay a total of approximately US$94,564 to the Independent Technical Consultant for preparing the Independent Technical Report, which was based on their normal professional daily rates plus reimbursement for incidental expenses, and not contingent upon the outcome of the Independent Technical Report.

INSURANCE

We maintain automobile insurance and property comprehensive insurance for our production facilities. We also maintain natural disaster insurance for our power generation facilities.

Consistent with what we believe to be customary practice in the PRC, we do not carry any business interruption insurance, key-man insurance or insurance covering potential environmental damage claims in the PRC. Such insurance is not mandatory under the laws and regulations of the PRC. Our Directors believe that our insurance coverage is generally consistent with the industry practice and provides adequate protection for our assets and operations. Nevertheless, we may be exposed to other claims or liabilities not covered by our insurance. See “Risk Factors — Risks relating to our business — We may suffer losses for contingencies not covered by our insurance policies.” in this document for more information. During the Track Record Period, we had not been subject to any insurance claims which were material to us.

EMPLOYEES

As of December 31, 2012, 2013 and 2014 and May 31, 2015, we employed 2,438, 2,974, 2,989 and 2,827 full-time employees, respectively. The following table sets forth the total number of employees by function as of May 31, 2015:

Function Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quality Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Number of Employees 2,026 362 216 78 88 33 24 2,827	% of Total	% of Total
			71.7 12.8 7.6 2.8 3.1 1.2 0.8 100.0

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We enter into separate labor contracts with our employees in accordance with the PRC labor law. As confirmed by the relevant PRC local labor authorities, we have not been subject to any penalties in relation to any violation of PRC labor laws and regulations.

We mainly recruit our employees based on the relevant requirements of the position, the experience and qualification of the employee and the prevailing market conditions at the relevant time. During the Track Record Period, we engaged third-party employment recruitment agencies for the recruitment of certain of our employees. For employees we hired through such agencies, we were responsible for making contributions to various social security fund and housing provident fund. As of the Latest Practicable Date, we had not experienced any significant problems with our employees or disruption to our operation due to labor disputes, nor had we experienced any difficulties in the recruitment and retention of experienced staff.

We believe our success depends on our employees’ provision of consistent, high-quality and reliable services. In order to attract, retain and develop the knowledge, skill level and quality of our employees, we place a strong emphasis on training our employees. Prior to commence of work, new employees must attend mandatory in-house training. Furthermore, our employees may attend external trainings such as trainings for manufacturing management, quality control management and human resources management.

In terms of remuneration, our employees’ remuneration depends on their particular functions: (i) our sales personnel’s remuneration includes base salary and bonus based on their total sales amount and recovery rate of accounts receivables; (ii) our production personnel’s remuneration includes base salary and piece rate salary; and (iii) our administration personnel’s remuneration includes basic salary, subsidies and performance-based bonuses. We make contributions for our employees in relation to the mandatory social security funds including pension, work-related injury insurance, maternity insurance, medical and unemployment insurance in accordance with applicable laws and regulations of the PRC. Except as disclosed in “— Regulatory Compliance and Legal Proceedings — Legal Proceedings and Regulatory Non-compliance,” we provide full coverage of housing provident fund contributions to our employees as required by local regulations.

INFORMATION SYSTEMS

We believe our information technology systems are important to our daily business operations. We have successfully implemented enterprise resource planning (ERP) systems to support our production processes, quality control, inventory, delivery, procurement, sales, costs management, accounting functions and human resources management.

INTELLECTUAL PROPERTY

As of the Latest Practicable Date, we had 34 utility model patents, two invention patents and 32 trademarks in the PRC, as well as seven trademarks in countries and regions outside the PRC, including four trademarks in Hong Kong. In addition, we had seven trademark applications in the PRC and six trademark applications in Hong Kong. We are also the registered owner of one domain names. See “3. Further Information About the Business — B. Our Intellectual Property Rights” in Appendix VII to this document for more information.

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To protect our intellectual property, we have formulated and implemented our internal confidentiality measures. Furthermore, we generally have confidentiality clauses in our agreements with our customers, research and development personnel, and the parties we cooperate with in design and research and development activities.

During the Track Record Period and up to the Latest Practicable Date, we had not been subject to any intellectual property infringement claims which had material impact on our Group. See also “Risk Factors — Risks relating to Our Business and Our Industry — We may be exposed to infringement or misappropriation claims by third parties.” for more information.

REGULATORY COMPLIANCE AND LEGAL PROCEEDINGS

Licenses and Permits

Our PRC Legal Advisors, have confirmed that our Company and its PRC subsidiaries have obtained all licenses, permits, approvals and certificates necessary to conduct their operations in all material respects, including the mining permit, the production safety permit and the license to operate our self-operated pier located by the banks of Beijing-Zhejiang Grand Canal near our production facilities, which expire on August 22, 2022, November 9, 2017 and February 28, 2018, respectively.

Anti-dumping and Anti-subsidy Investigations

There have been anti-dumping and anti-subsidy investigations initiated by the European Commission, the United States and Canada against Chinese PV products manufactures in recent years.

Investigation made by European Commission on PV glass imported from the PRC

EU ProSun Glass, on behalf of the producers representing more than 25% of the PV glass production in the European Union, lodged a complaint with the European Commission in January 2013 that PV glass produced in the PRC were dumped into the European Union and jeopardize the EU PV glass industry. In February 2013, the European Commission launched an anti-dumping investigation on PV glass imported from the PRC. A similar complaint was lodged by EU ProSun Glass in March 2013 and in April 2013, the European Commission launched an anti-subsidy investigation on PV glass imported from the PRC into the European Union. In May 2014, as a result of these investigations, the European Commission imposed definitive anti-dumping duty and countervailing duty on imports of Chinese-made PV glass. According to the anti-dumping and anti-subsidy measures imposed by the European Commission, our customers are subject to an anti-dumping duty rate of 29.3% and a countervailing duty rate of 12.8% on our PV glass products that are imported into the European Union for five years.

Furthermore, EU ProSun Glass, on behalf of the producers representing more than 25% of the EU production of PV glass, lodged a complaint with the European Commission in November 2014 that despite the imposition of anti-dumping duties on imports of Chinese PV glass, Chinese PV glass

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export prices decreased and there was insufficient movement in the resale prices or subsequent selling prices in the European Union, which resulted in an increased dumping margin. The European Commission commenced the absorption reinvestigation in December 2014. We responded to the notice of initiation for the absorption reinvestigation. In August 2015, the European Commission published its findings on the absorption reinvestigation and increased the anti-dumping duty applicable to our customers who would be importing our PV glass products into the European Union to 71.4% from the previous anti-dumping duty of 29.3% as the European Commission found that export prices of PV glass products originated from the PRC decreased since the imposition of the original anti-dumping measures in 2014.

Investigation made by the United States on PV modules, laminates and/or panels consisting of c-Si PV cells from the PRC and its impact

The U.S. Department of Commerce commenced its anti-dumping and anti-subsidy investigations on c-Si PV cells imported from China in 2011 and announced its final determination in October 2012. Accordingly, c-Si PV cells imported into the United States are subject to anti-dumping duty ranging from 18.32% to 249.96% and countervailing duty ranging from 14.78% to 15.97%.

Furthermore, in December 2014, the U.S. Department of Commerce has announced its affirmative final determination in anti-dumping duty investigations of imports of modules, laminates and/or panels consisting of c-Si PV cells from the PRC not covered by existing anti-dumping and countervailing duties. As a result, the U.S. Customs and Border Protection will collect cash deposits for anti-dumping duty equals to the applicable weighted-average dumping margins and the countervailing duty equals to the final subsidy rates, unless the products are covered by existing anti-dumping and countervailing duty orders on c-Si PV cells. The U.S. Department of Commerce has determined that the c-Si PV products from the PRC have been sold in the United States at dumping margins ranging from 26.7% to 165.0% and received countervailable subsidies from the PRC government ranging from 27.6% to 49.8%. To the best of our knowledge, information and belief, some of our PV glass customers in the PRC exported c-Si PV cells to the United States. However, we do not have any knowledge of nor can we ascertain accurately the amount of our PV glass that has been used by our PV glass customers in the production of c-Si PV cells sold to their U.S. customers.

Investigation made by Canada Border Services Agency on PV modules and laminates from the PRC and its impact

The Canada Border Services Agency has initiated investigations in December 2014 on alleged injurious dumping and subsidizing of certain PV modules and laminates originating in or exported from the PRC. The determination of final duty was announced in July 2015, ranging from 9.3% to 154.4% depending on the exporter. Some of our PV glass customers in the PRC exports PV modules and/or laminates to Canada. However, we do not have any knowledge of nor can we ascertain accurately the amount of our PV glass that has been used by our PV glass customers in the production of PV modules and laminates sold to their Canadian customers.

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As provisional duty has been imposed in Canada for the importation of PV modules and/or laminates from the PRC, the prices of PV panels and PV cells imported from the PRC increased as a result and thereby, may reduce their demand and price-competitiveness overseas, and may indirectly affect the demand of PV glass in China. See also “Risk Factors — Risk relating to Our Business and Our Industry — Our operating results are subject to various foreign trade regulation measures, including anti-dumping and anti-subsidy on imported PV glass products.”

Sales of PV glass products to Europe, U.S. and Canada

For the three years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, based on our internal records, our sales generated from direct sales of our PV glass products to Europe amounted to RMB55.4 million, RMB110.4 million, RMB128.0 million, RMB52.2 million and RMB32.3 million, respectively, representing 3.7%, 5.0%, 4.5%, 4.5% and 2.6% of our total revenue, respectively, and we did not make any indirect sales of PV glass products through wholesalers or distributors during the periods. During the same periods, based on our internal records, the sales volume of our PV glass to Europe was approximately 1.7 million sq.m., 3.5 million sq.m., 4.4 million sq.m., 1.9 million and 1.1 million sq. m., respectively, and the average selling price of our PV glass sold to Europe was approximately RMB32.68 per sq.m., RMB31.55 per sq.m., RMB29.22 per sq.m., RMB28.09 per sq.m. and RMB29.79 per sq.m., respectively, for the same periods. The average selling price of PV glass sold to our European customers fell in 2014 mainly due to a few of our European customers who paid a higher price for our PV glass have ceased PV module manufacturing, which to our best knowledge, information and belief, were not directly related to the imposition of anti-dumping and anti-subsidy duties. The sales volume of our PV glass to our European customers and the revenue generated from such sales decreased for the five months ended May 31, 2015 as compared to the same period in 2014 primarily due to some of our European customers ceasing to manufacture PV modules in Europe and had moved its production to Asia. The average selling price during the same period increased primarily due to an increase of orders with coating, which demanded higher selling price. Although we experienced a decrease in average selling price in 2014 and a decease in the sales of PV glass to Europe for the five months ended May 31, 2015, we do not believe such decrease was primarily due to such investigation and/or the imposition of duties during the Track Record Period. Furthermore, with the higher anti-dumping duty imposed by the European Commission in August 2015 applicable to our customers who would be importing our PV glass products into the European Union, we expect our sales of PV glass products to Europe will further decrease in the future. As our sales of PV glass products to Europe accounted for approximately 2.6% of our total revenue for the five months ended May 31, 2015 based on our internal records, we do not expect any further decrease in our sales of PV glass products to Europe will have a material and adverse impact on our business operations or financial results.

In addition, based on our internal records, the sales of our PV glass to North America, which includes the United States and Canada, for the years ended December 31, 2012, 2013 and 2014 and for five months ended May 31, 2014 and 2015 amounted to RMB40.7 million, RMB31.2 million, RMB49.7 million, RMB21.0 million and RMB26.9 million, respectively, representing 2.7%, 1.4%, 1.8%, 1.8% and 2.2%, respectively, of our total revenue. During the same periods, based on our internal records, the sales volume for our sales to our North American customers was approximately 1.3 million sq.m., 1.0 million sq.m., 1.8 million sq.m., 0.8 million sq.m. and 1.0 million sq.m., respectively, and the average selling price was approximately RMB31.82 per sq.m., RMB31.02 per

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sq.m., RMB27.79 per sq.m., RMB27.64 per sq.m. and RMB26.77 per sq.m., respectively. The sales volume of our PV glass sold to North American customers and the revenue generated from such sales decreased in 2013 mainly because we ceased selling our PV glass to one smaller customer with lower profit margin. In 2014, the sales volume of our PV glass sold to North American customers and the revenue generated from such sales increased as one of our customers increased their production in North America. However, the average selling price decreased in 2014 as compared to 2013 because certain of our selling price included shipping and transportation costs in 2013 as requested by our customers. The sales volume of our PV glass sold to North American customers and the revenue generated from such sales for the five months ended May 31, 2015 increased as compared to the five months ended May 31, 2014 primarily because our customers continue to expand their production operations in North America. Hence, we did not notice any material and adverse impact on our sales to North America during the Track Record Period from the U.S. and Canadian anti-dumping and anti-subsidy investigations, duties and/or tariffs. Furthermore, since our products did not include PV modules, laminates and/or panels, the U.S. and Canadian anti-dumping and countervailing duties and/or tariffs did not have any direct impact on our business and financial results.

To our best knowledge, information and belief, some of our PV glass customers in the PRC exported c-Si PV cells to United States and PV modules and laminates to Canada. Subsequent to the imposition of the anti-dumping duty in the United States in 2012 and in Canada in 2015, we were not aware any material and adverse impact on our business and financial results directly related to the imposition of such duties. According to the Frost & Sullivan Report, exports of PV modules from the PRC to the United States and Canada amounted to a small fraction of China’s total PV module export, being 12.7% in 2013 and 16.3% in 2014. Furthermore, based on our internal records, our sales of PV glass products to our PRC customers (including customers who may have exported c-Si PV cells to the United States and PV modules and laminates to Canada) for the year ended December 31, 2012, 2013 and 2014, and for the five months ended May 31, 2014 and 2015, amounted to RMB570.2 million, RMB685.7 million, RMB988.6 million, RMB420.9 million and RMB465.6 million, respectively, and the sales volume of PV glass products to our PRC customers during the same periods amounted to 20.0 million sq.m., 27.2 million sq.m., 34.9 million sq.m., 15.3 million sq.m. and 16.6 million sq.m., respectively. The average selling price of our PV glass products sold to our PRC customers was RMB28.47 per sq.m., RMB25.18 per sq.m., RMB28.29 per sq.m., RMB27.50 per sq.m. and RMB27.98 per sq.m., respectively, for the years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2014 and 2015, based on our internal records. The average selling price decreased in 2013 as compared to 2012 primarily due to the fact that we sold 5.9 million sq.m. of PV raw glass with average selling price of RMB17.67 per sq.m., which was lower than the selling prices of our PV glass products, based on our internal records. Although the average selling price decreased in 2013, our sales increased by 20.3% during the same year. Hence, we believe the imposition of anti-dumping and countervailing duties did not have any material and adverse impact on our business and financial condition as a whole during the Track Record Period.

Going forward, according to the Frost & Sullivan Report, despite the fact that the PV industry in China had experienced excess capacity and oversupply several years ago, with the recovery of the PV installation globally and an increase in the consumption of PV glass in 2014, the production volume of PV glass in China is expected to grow at a CAGR of 10.4% from 2015 to 2019. Furthermore, according to the Frost & Sullivan Report, although the U.S. and Canadian anti-dumping and anti-subsidy duties on Chinese PV modules will negatively affect PV module exports to these

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countries, these duties will not lead to a significant impact on export business of China’s PV module as China’s PV module exports to the United States and Canada accounted for a small fraction of its total PV module export and the Asian market has taken place as the largest export destination for China’s PV modules with a market share of more than 50% and the growing PV demand in Asia is expected to offset the decline of exports to the United States and Canada. Hence, we do not believe the anti-dumping and countervailing duties imposed in the United States on c-Si PV cells, in Canada on PV modules and laminates and in the European Union on PV glass will have any material and adverse effect on our business and financial results.

Based on the above and as of the date of this document, we do not believe the Subject Sales and our future sales to our customers of the Subject Sales are likely to present material sanctions risks to our Shareholders or potential investors merely as a result of holding our Shares or of investing in our Company, or to the Stock Exchange and its affiliates as a result of the Listing or of providing services relating to the Listing. For details of potential risks, please see “Risk Factors — Risks Relating to Our Business and Our Industry — Our business, financial condition and results of operations may be materially and adversely affected by the Australian, Canadian, EU and U.S. sanctions against Russia, Belarus and Tunisia.” Furthermore, based on our best knowledge, information and belief, we confirm that our business does not involve any prohibited activities under the relevant sanctions laws and regulations of Australia, Canada, the European Union and the United States. As for the United Nations sanctions, as the United Nations Security Council resolutions do not govern the actions of private parties, rather, they are instructions to UN members to impose specified sanctions prohibitions that apply to private parties. Therefore, as advised by our international sanctions law legal advisors, the United Nations Security Council resolutions are not directly applicable to us as private parties. Accordingly, to our best knowledge, information and belief, we confirm that the United Nations sanctions are not directly applicable to us.

Internal Control Measures

As we intend to continue to make sales to our customers of the Subject Sales in Russia, Belarus and Tunisia, in order to identify and monitor our exposure to risks associated with sanctions laws relating to such sales, we will adopt, before the Listing, enhanced internal control measures, including, among others:

(a) to further enhance our existing internal risk management functions, our Board has established a risk management committee. Members of the risk management committee include Mr. Ruan Hongliang, the chairman of our Board, Ms. Jiang Jinhua, our executive Director, and Ms. Pan Yushuang, our independent non-executive Director. Mr. Ruan Hongliang serves as the chairman of our risk management committee. Our risk management committee is principally responsible for monitoring our exposure to sanctions law risks and overseeing our implementation of the related internal control policies;

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(b) our credit and risk control department will assist our risk management committee in the day-to-day monitoring of our sanctions risks, including reviewing the existing and potential customers’ information against our control list of Sanctioned Countries and persons and, if needed, report to the risk management committee, to prepare summary of the use of proceeds from the [REDACTED] for risk management committee’s review and to monitor our transactions against sanctions risks as requested by our risk management committee;
(c) for new customers from Russia, Belarus and Tunisia and the other Sanctioned Countries, our risk management committee must review and approve these potential customers before we can enter into any agreements with these potential customers;
(d) we will maintain a control list of the Sanctioned Countries, persons and entities to review our existing and potential customers’ information, and will update the list from time to time;
(e) our risk management committee may also engage external legal counsel with necessary expertise and experience in sanctions matter to evaluate sanctions-related risks as and when necessary and will adhere to appropriate advice provided by such external legal counsel;
(f) the risk management committee will convene monthly meetings with our credit and risk control department, and to the extent necessary, our sales, procurement, finance and/or internal audit departments, to assess the latest sanctions-related risks our operations may be exposed to;
(g) trainings relating to sanctions law will be provided to our Directors, senior management members and other relevant personnel; and
(h) our risk management committee will monitor our use of the proceeds from the [REDACTED], as well as the performance of our undertaking to the Stock Exchange relating to sanctions matters.

Our Directors are of the view that the above measures will provide reasonably adequate and effective framework to assist us in identifying and monitoring any material risks relating to sanctions law. The Sole Sponsor is of the view that the internal control measures set out above will provide a reasonably adequate and effective framework to assist our Company in identifying and monitoring any material risk relating to sanctions laws.

Undertakings to the Stock Exchange

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our website, and in our annual or interim report of our efforts on monitoring our business exposure to sanctions risk, the status of future business, if any, in the Sanctioned Countries and its business intention relating to the Sanctioned Countries. If we were in breach of such undertaking to the Stock Exchange, we risk possible delisting of our H Shares from the Stock Exchange.

Occupational Health and Safety

We are subject to various production safety rules and regulations in the PRC. For further details, please refer to the section headed “Applicable Laws and Regulations” in this document.

We have implemented various safety guidelines and operating procedures for our production process to ensure safe operation of our manufacturing facilities and to prevent injuries. We conduct regular and thorough worksite inspection to eliminate potential hazards in our work environment. We also provide mandatory safety training to all new employees prior to commence of work. Furthermore, we provide our employees with occupational safety education and training to enhance their awareness of safety issues from time to time.

We have not experienced any material work-place accident during the Track Record Period, and our PRC Legal Advisors, have confirmed that we are in compliance in all material respects with applicable laws relating to labor safety matter in the PRC.

Land Rehabilitation

The mining activities at the Mine is subject to laws, rules and regulations on land rehabilitation promulgated by the PRC government, a summary of which is set out in the section headed “Applicable Laws and Regulations — Applicable PRC Laws and Regulations” in this document.

With respect to the Mine, we have to pay the security deposit for land rehabilitation to the Anhui Province Land and Resources Department of the PRC of approximately RMB2.5 million in nine installments, with the first year payment equivalent to 20% of the total security deposit, and each of the remaining eight installments equivalent to 10% of the total security deposit. To our best knowledge, information and belief, the land rehabilitation security deposit is determined by the relevant government authority based on the estimated maximum cost of land rehabilitation. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we paid a total of RMB0.5 million, nil, RMB0.2 million and RMB0.2 million for the land rehabilitation security deposit, respectively. As advised by our PRC Legal Advisors, we have paid our land rehabilitation security deposit in accordance with the applicable laws and regulations in the PRC.

Because (i) we have made payments for the first several installments of land rehabilitation security deposit during the Track Record Period in accordance with the requirements set forth by the relevant government authorities; (ii) we believe the total amount of land rehabilitation security deposit of RMB2.5 million would be sufficient to cover the actual costs of land rehabilitation; and (iii) the amount of payment for each installment is relatively small, therefore, we have not made any provision for the outstanding installments of land rehabilitation security deposit during the Track Record Period.

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Environmental Matters

Our operation is subject to the current environmental laws, rules and regulations promulgated by the PRC government, a summary of which is set out in the section headed “Applicable Laws and Regulations — Applicable PRC Laws and Regulations” in this document. The environment related laws, rules and regulations applicable to our operations in the PRC include, among others, Environmental Protection Law of the People’s Republic of China 《中華人民共和國環境保護法》( ), Law on Environmental Impact Assessment of the People’s Republic of China 《中華人民共和國環( 境影響評價法》) and Law on Prevention and Control of Water Pollution of the People’s Republic of China* 《中華人民共和國水污染防治法》( ).

One of our major pollutants produced from our production is nitrogen oxides and sulphur dioxide. We have invested approximately RMB250.0 million during the Track Record Period to install environmental protection and energy-saving equipment to minimize the impact on the environment from our production, including flue-gas desulphurization facility, flue-gas denitration facility, residual heat power generator and emissions monitor system. We can also monitor, through the emissions monitor system, whether we satisfy the PRC standards on exhaust gas emissions. Furthermore, we have been accredited with ISO14001:2004 for environmental management system relating to the production processes of our PV glass, which enables us to reduce our cost of waste management and our consumption of energy and materials.

During the Track Record Period and up to the Latest Practicable Date, we have not received any notice or warning in relation to material pollution in respect of our production and facilities or material non-compliance with the applicable environmental laws, rules and regulations. Non-compliance with any environmental laws, rules and regulations may, depending on the seriousness of the violation, result in an order for rectification from the authorities, penalties or an order for cessation of production. There is no assurance that the PRC national or local government authorities will not impose additional environmental protection requirements, which might disrupt our manufacturing process or require us to incur additional expenditure to comply with such additional requirements. During the Track Record Period, we have not been subject to any fines, penalties or other legal actions by government agencies in the PRC resulting from any mateiral non-compliance with any environmental protection laws in the PRC and, so far as our Directors are aware after making all reasonable enquiries, there was no threatened or pending action by any PRC environmental government agencies in respect thereof. Based on our internal records, our cost for compliance with applicable environmental rules and regulations for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015 was approximately RMB23.2 million, RMB20.5 million, RMB44.6 million and RMB30.0 million, respectively. We expect our annual cost for compliance with applicable environmental rules and regulations for the year ending December 31, 2015 will be approximately RMB40.0 million.

Legal Proceedings and Regulatory Non-compliance

From time to time, we may be subject to various claims and legal actions arising in the ordinary course of business. As of the Latest Practicable Date, we were not engaged in any actual or threatened litigation, arbitration or claim of material importance or in any bankruptcy, and no litigation,

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arbitration or claim or bankruptcy is known to our Directors to be pending or threatened by or against us that would have a material adverse effect on our operating results, financials or reputation. Our PRC Legal Advisors, have confirmed that the operations of our Company and its PRC subsidiaries comply with all the relevant PRC rules and regulations in all material aspects.

We set out below the non-compliance relating to our Group during the Track Record Period:

Non-compliance incidents During the Track Record Period, we did not fully comply with the relevant requirements for making contributions to the housing provident fund for our relevant employees, primarily because we and our wholly-owned subsidiaries in the PRC (i) did not make the requisite contributions for several months during the Track Record Period; and (ii) did not make contributions to housing provident fund for newly hired employees. We estimate that the housing provident fund contributions and penalty, if any, that we may be required to pay as of the Latest Practicable Date amounted to approximately RMB176,500.	Legal consequences According to the relevant PRC laws and regulations, the relevant government authorities may require us to make the unsubscribed contribution within a given period and, if we fail to do so within the prescribed period, they may impose a fine on us in the amount of 0.1% of outstanding housing provident fund contributions for each day such contributions are overdue, and may also apply from a PRC court for an order to enforce the payment. As of the Latest Practicable Date, we had not received any requirement from the relevant PRC government authorities requiring us to make the outstanding contribution within a prescribed period.	Latest status and actions taken We have made provisions of RMB176,500 for the underpayment of housing provident fund and penalty, if any, during the Track Record Period. We have received a confirmation letter from the relevant PRC government authority, which confirmed that (i) we have established housing provident fund system in accordance with relevant laws and regulations; and (ii) no administration penalty has been or will be imposed on us as a result of any breach of the applicable laws and regulations on housing provident fund. Our Controlling Shareholders have agreed to indemnify us for all claims, costs, expenses and losses incurred by us due to our non-compliance with the housing provident fund regulations, except for the provisions which has been made during the Track Record Period.	Our PRC Legal Advisors’ view
			Based on (i) the confirmation letter issued by the relevant PRC government authority; (ii) the provision we had made; and (iii) the indemnity provided by our Controlling Shareholders in favor of our Group under the Deed of Indemnity, our PRC Legal Advisors, are of the view that our non-compliance with respect to the housing provident fund contribution will not have a materially adverse impact on our business or operations.

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PROPERTIES

As of the Latest Practicable Date, we owned ten parcels of land in the PRC with a total site area of approximately 644,605.1 sq.m. and 31 buildings a total gross floor area of approximately 485,786.33 sq. m. We have recently entered into a building ownership transfer agreement on October 9, 2015 to acquire the land use rights for a parcel of land and building ownership for buildings erected on the land located on Xigang Road, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC. The land had an aggregate site area of approximately 8,857.00 sq.m. and the buildings had an aggregate gross floor area of approximately 5,159.38 sq.m. The total consideration for the acquisition amounted to approximately RMB8.4 million, which is expected to be paid in the first quarter of 2016 and after the registration of the building ownership transfer agreement has been completed with the relevant PRC authority, which will be settled with our internal source of funds. We intend to use this property primarily for warehousing and storage. All of the above properties are used for non-property activities as defined under Rule 5.01(2) of the Listing Rules. As of May 31, 2015, each of our owned properties had a carrying amount of less than 15% of our total assets. As a result, this document is exempt from compliance with the requirements of Chapter 5 of the Listing Rules to value or include in this document any valuation report of our property interests. Furthermore, pursuant to section 6(2) of the [REDACTED], this document is exempted from compliance with the requirements of section [REDACTED], which requires a valuation report with respect to all our interests in land and buildings. We also leased two properties with a total gross floor area of 240.7 sq.m.

Owned Properties

Land

As of May 31, 2015, we owned land use rights for ten parcels of land in the PRC with an aggregate site area of approximately 644,605.1 sq.m. A summary of our land use rights is set out below:

No. 1. 2.	Description/Location Located on Xiuyuan Road West-side, Xiuzhou Industrial Area, Jiaxing, Zhejiang Province, the PRC, and comprised of two parcels of land Located on No. 1999 Yunhe Road, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC, and comprised of two parcels of land	Site area (sq. m.) 78,294.9 358,402.0	Owner Our Company Our Company	Existing or intended usage
				Production facilities, warehouses and offices Production facilities, warehouses, offices and pier construction

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No. 3. 4. 5. 6.	Description/Location Located on Xigang Road West-side, Xiuzhou Industrial Area, Jiaxing, Zhejiang Province, the PRC, and comprised of one parcel of land Located on Hongyue Road North-side and Binhe Road West-side, Honghe Town, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC, and comprised of two parcels of land Located on No. 59 Yuanting Road, Anting Town, Jiading District, Shanghai, the PRC, and comprised of one parcel of land Location on No. 999 Hongfu Road, Honghe Town, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC, and comprised of two parcels of land	Site area (sq. m.) 8,000.0 41,447.2 34,233.0 124,228.0	Owner Our Company Zhejiang Jiafu Shanghai Flat Zhejiang Jiafu	Existing or intended usage
				Under construction Production facilities, warehouses, and offices Production facilities, warehouses and offices Production facilities, warehouses and offices

Buildings

As of May 31, 2015, we had 30 building ownership certificates for buildings located in the PRC with an aggregate gross floor area of approximately 481,781.6 sq.m. A summary of our building ownership is set out below:

No. 1. 2.	Description/Location Located on No. 1999 Yunhe Road, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC and comprised of 11 buildings Located on Xiuyuan Road West-side, Xiuzhou Industrial Area, Jiaxing, Zhejiang Province, the PRC and comprised of seven buildings	Gross Floor Area (sq. m.) 281,206.7 52,811.7	Owner Our Company Our Company	Existing usage
				Production facilities, warehouses, and offices Production facilities, and warehouses

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No. 3. 4. 5. 6.	Description/Location Located on Hongyue Road North-side and Hongxin Road East-side, Honghe Town, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC and comprised of four buildings Located on Hongxin Road East-side, Hongyue Road South-side and Binhe Road West-side, Honghe Town, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC and comprised of one building Located on No.999 Hongfu Road, Honghe Town, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC and comprised of six buildings Located on No. 59 Yuanting Road, Anting Town, Jiading District, Shanghai, the PRC and comprised of one building	Gross Floor Area (sq. m.) 32,095.8 48,400.2 53,689.6 13,577.6	Owner Zhejiang Jiafu Zhejiang Jiafu Zhejiang Jiafu Shanghai Flat	Existing usage
				Production facilities, warehouses, and offices Production facilities, warehouses, and offices Production facilities, and warehouses Production facilities, warehouses and offices

As of the Latest Practicable Date, we had one additional building ownership certificate for a building owned by our Company located on No. 1999 Yunhe Road, Xinzhou District, Jiaxing, Zhejiang Province, the PRC for a total gross floor area of 4,004.73 sq.m., which was primarily used for warehousing and storage.

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Leased Properties

As of May 31, 2015, we leased two properties (excluding intra-group lease arrangement) with Independent Third Parties in the PRC, with an aggregate floor area of approximately 240.7 sq.m. A summary of our lease arrangement is set out below:

No. 1. 2.	Description/Location Quartz sand processing zone, Damiao Town, Fengyang County, Anhui Province, the PRC Room 1201, Unit 1, Building 2, Dacheng Mingzuo, Economic and Technological Development Zone, Xiaoshan, Hangzhou, Zhejiang Province, the PRC	Site area (sq. m.) 150.0 90.7	Lessee Anhui Flat Materials Company	Existing usage Offices Offices	Date of Expiry
					December 31, 2017 December 19, 2015

The relevant lease agreement for our leased property in Hangzhou, Zhejiang Province, was not registered with the relevant PRC government authorities. Our PRC Legal Advisors have advised us that we may be required by the relevant authorities to register the relevant lease agreement within a prescribed time limit. If we fail to do so, we may be subject to fines ranging from RMB1,000 to RMB10,000 for each non-registered lease. However, as of the Latest Practicable Date, we have not been fined by the relevant PRC authorities with respect to this non-registered lease, and our PRC Legal Advisors have advised us that the non-registration of such lease agreement will not affect its validity.

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

CONTROLLING SHAREHOLDERS

As of the Latest Practicable Date, our Controlling Shareholders, Mr. Ruan Hongliang and Ms. Jiang Jinhua, own approximately 32.54% and 24.01% of our total registered capital. Immediately following completion of the [REDACTED] and without taking into account any H Shares which may be allotted and issued pursuant to the exercise of the [REDACTED], Mr. Ruan Hongliang and Ms. Jiang Jinhua will own approximately [REDACTED]% and [REDACTED]% interest in our Company, respectively. Ms. Jiang Jinhua is the spouse of Mr. Ruan Hongliang. On June 12, 2015, Mr. Ruan Hongliang and Ms. Jiang Jinhua entered into a concert party agreement which confirmed, among other things, that they have been and will continue to be acting in concert in relation to the exercise of voting rights on general meetings of our Company until such time as such agreement is varied or terminated by the parties in writing. Accordingly, Mr. Ruan Hongliang and Ms. Jiang Jinhua together will be entitled to exercise approximately [REDACTED]% of the voting rights at the general meetings of our Company, and each of Mr. Ruan Hongliang and Ms. Jiang Jinhua will be regarded as our Controlling Shareholder under the Listing Rules immediately following the Listing.

As of the Latest Practicable Date, neither our Controlling Shareholders nor our executive Directors had interest in any other companies which may directly or indirectly, compete with our Group’s business.

INTEREST OF MS. RUAN ZEYUN

Ms. Ruan Zeyun is our chief financial officer, Board secretary and one of our joint company secretaries. She is also the daughter of Mr. Ruan Hongliang and Ms. Jiang Jinhua and is interested in approximately 25.97% of our registered capital as of the Latest Practicable Date, and will hold approximately [REDACTED]% interest in our Company immediately following completion of the [REDACTED] (without taking into account any H Shares which may be allotted and issued pursuant to the exercise of the [REDACTED]).

Apart from interest in our Company, Ms. Ruan Zeyun owns 100% interest in Jiaxing Yihe Energy Co., Ltd.[*] (嘉興義和能源有限公司) (“Yihe Energy”), a limited liability company established in the PRC on June 16, 2015 with a registered capital of RMB10 million. As of the Latest Practice Date, the registered capital of Yihe Energy has not been paid up.

It is intended that upon the registered capital of Yihe Energy being paid up, and subject to obtaining all relevant government approvals, it will engage in the business of construction and operation of distributed PV systems and PV power stations, and sale of electricity generated by such distributed PV systems and PV power stations to third parties. On June 25, 2015, Yihe Energy obtained a government approval from the Development and Reform Bureau of Jiaxing, Xiuzhou District* (嘉興市秀州區發展和改革局) to construct 85MW of distributed PV systems with a total investment amount of RMB700 million. This approval is not subject to any completion schedule or deadline. As of the Latest Practicable Date, Yihe Energy has not commenced constructions of the 85MW of distributed PV systems.

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

Our Group is principally engaged in the business of design and development, production and sale of PV glass and our major products include PV glass, float glass, household glass and architectural glass, which is different from the principal business activities of Yihe Energy. Whilst our Group currently operates a distributed PV system and planned to build a new 15MW distributed PV system, the electricity generated by these distributed PV systems are all used and intended to be used to support our production activities with no external sales of electricity to third parties. As such, our Directors consider that the business of Yihe Energy do not and will not, directly or indirectly, compete with the principal business of our Group.

As of the Latest Practicable Date, Yihe Energy intends to construct distributed PV systems with an annual designed capacity ranging from 30 to 50 MW in 2016. Given the embryonic stage of Yihe Energy’s business, together with our Directors’ belief that it is in the best interest of our Shareholders for our Group to continue to focus on our capital resources, management effort and expertise on further developing our existing principal business activities instead of developing a new business segment, our Directors are of the view that it is premature for our Group to consider any form of co-operation with Yihe Energy at this stage. Going forward, depending on our Group’s business development strategies as determined by our Board from time to time, and the business performance of Yihe Energy, our Board may revisit the merits of any form of co-operation with Yihe Energy, including but not limited to acquiring any interest in it. Any decision in this regard will be made taking into consideration the interests of our Shareholders as a whole and in compliance with the relevant requirements of the Listing Rules.

As of the Latest Practicable Date, it is not intended that there will be any continuing connected transaction between our Group and Yihe Energy upon the Listing. In the event that our Group and Yihe Energy enter into any continuing connected transactions in the future, we will comply with the relevant requirements of the Listing Rules.

Right of first refusal and call option

Ms. Ruan Zeyun has undertaken to our Company that, during the “restricted period” (as referred to in “Non-competition Undertaking — Non-competition” below) in the event that she intends to dispose of any or all of her direct or indirect interests in Yihe Energy (the “Yihe Energy Interests”), or she and/or Yihe Energy intends to dispose any or all of the distributed PV systems or PV power stations owned by Yihe Energy from time to time (together with the Yihe Energy Interests, the “Subject Interests”), she, or she shall procure and undertake that Yihe Energy (as the case may be), shall first offer our Company the right to acquire any or all of such Subject Interests. Ms. Ruan Zeyun and/or Yihe Energy may only proceed with the proposed disposal, on terms not more favorable than those offered to our Company, following the rejection of such offer by our Company.

In addition, Ms. Ruan Zeyun has irrevocably and unconditionally granted our Company an exclusive and irrevocable option to acquire, or direct any of our subsidiaries to acquire, at the sole and absolute discretion of our Company, any or all of the Subject Interests at a consideration to be arrived at after arm’s length negotiation and on a fair and reasonable basis as agreed between our Company and herself.

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RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

NON-COMPETITION UNDERTAKING

Non-competition

Pursuant to the Deed of Non-competition, each of the Controlling Shareholders and Ms. Ruan Zeyun (collectively the “Covenantors”) have jointly and severally and irrevocably undertaken to our Company (for itself and for the benefit of its subsidiaries) that he or she would not, and would procure that his or her close associates (except any members of our Group) would not, during the restricted period set out below, directly or indirectly, either on his or her own account or in conjunction with any person, firm or company, carry on, participate, be interested, engaged in, acquire or hold (in each case whether as a shareholder, partner, agent, employee or otherwise) any business which is or may be in competition with the business of any member of our Group from time to time (the “Restricted Business”).

The Deed of Non-competition is conditional upon:

(a) the Listing Committee of the Stock Exchange granting approval of the listing of all H Shares proposed to be issued by our Company pursuant to the [REDACTED] and permission to deal in such shares on the Main Board of the Stock Exchange;
(b) all conditions precedent under the Underwriting Agreements having been fulfilled (and/or the performance of any such conditions precedent having been waived by the Underwriters) and all obligations of the Underwriters under the Underwriting Agreements having become unconditional and neither of the Underwriting Agreements having been terminated pursuant to the terms and conditions therein; and
(c) the listing and trading of the H Shares on the Main Board of the Stock Exchange.

The “restricted period” stated in the Deed of Non-competition refers to the period during which the Covenantors undertake not to compete with our Group in accordance with the provisions of the Deed of Non-competition until the occurrence of the earliest of: (i) the H Shares of our Company ceasing to be listed on the Main Board of the Stock Exchange; (ii) in respect of each Covenantor, the relevant Covenantor or any of his/her close associates ceasing to hold directly or indirectly an equity interest in our Company; (iii) in repect of the Controlling Shareholders only, the Controlling Shareholders and/or their respective close associates jointly or severally exercising or controlling the exercise of less than 30% in aggregate of the voting power at general meetings of our Company and together ceasing to be the single largest Shareholder; or (iv) in respect of Ms. Ruan Zeyun only, Ms. Ruan Zeyun and/or her close associates jointly or severally exercising or controlling the exercise of less than 15% of the voting power at general meetings of our Company.

Options for New Business Opportunities

Each of the Covenantors has undertaken to procure that, during the restricted period, if any business opportunity is offered to any of the Covenantors or his/her respective close associates which falls within the scope of the Restricted Business, the Covenantors will immediately notify or cause

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their close associates to notify (“Offer Notice”) our Company of such business opportunity, and will assist our Company (and/or its subsidiaries) to obtain such business opportunity on the same terms as those offered to them or their close associates, or on more favorable terms or on terms acceptable to our Company (and/or its subsidiaries).

The Covenantors will be entitled to pursue such business opportunity only if (i) the Covenantors and/or their respective close associates have given Offer Notice to our Company in relation to the terms and detailed information with respect to their investment, participation and engagement in and/or operation of such business opportunity; and (ii) such business opportunity as offered by the third party has first been offered to our Company (and/or its subsidiaries), including: (a) the terms of offer between our Company (and/or its subsidiaries) and the third party; or (b) the terms on which our Company (and/or its subsidiaries) to engage in the Restricted Business with the Covenantors and/or their respective close associates, and our Company, after review and approval by the independent non-executive Directors and at the Board and/or general meeting of Shareholders (if applicable), where the Covenantors shall abstain from voting, has confirmed that our Company (and/or its subsidiaries) does not intend to invest in, conduct, operate and/or participate in such business opportunity and has made relevant written confirmation to the Covenantors, and the major terms on which the Covenantors and/or their respective close associates invest in, conduct, operate or participate in such business opportunity subsequently will not be more favorable than those terms offered to our Company.

Exceptions

In the event that the Board or general meeting of Shareholders (if applicable) resolves that it is appropriate for the Covenantors and/or their respective close associates and our Company (and/or its subsidiaries) to jointly invest in, conduct, operate and/or participate in the business opportunity offered by such third party as mentioned under the paragraph headed “Options for New Business Opportunities” above, and if our Company gives written invitation, the Covenantors and/or their respective close associates may together with our Company (and/or its subsidiaries), jointly invest in, conduct, operate and/or participate in the business opportunity subject to the provisions of the Listing Rules and any requirement from the Stock Exchange (including but not limited to the obtaining of approval from the independent non-executive Directors and/or independent Shareholders of the Company and/or other approvals).

In addition, in any one of the following circumstances, the Covenantors and their respective close associates may hold or own business identical with or similar to the Restricted Business, as well as the shares or any other securities of any company (the “Listed Company”) listed on any stock exchange recognized by the laws of the relevant countries (including a stock exchange recognized by the laws and regulations of the PRC):

(a) the latest audited financial statements of the Listed Company prepared in accordance with the relevant accounting standards and systems (if the Listed Company has prepared unconsolidated financial statements and consolidated financial statements simultaneously, then shall use the consolidated financial statements) show that the turnover of those

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business identical with or similar to Restricted Business accounts for no more than 10% of the total consolidated turnover of the Listed Company, or the net assets of such business accounts for no more than 10% of the total consolidated assets of the Listed Company; or

(b) the total number of the shares held by the Covenantors and their respective close associates in aggregate does not exceed 5% of the total issued share capital of such Listed Company, and the Covenantors and their respective close associates are not entitled to appoint more than half of the directors of such Listed Company, and at any time there should exist at least another shareholder of the Listed Company whose shareholding in such Listed Company is higher than the total number of shares held by the Covenantors and their respective close associates in aggregate.

Further undertaking

Each of the Covenantors has further undertaken that:

(a) upon the request of our independent non-executive Directors, it will provide all information necessary for our independent non-executive Directors to review the Covenantors’ and their respective close associates’ (excluding our Company and its subsidiaries) compliance with and enforcement of the Deed of Non-competition;
(b) it agrees that we disclose the decision made by the independent non-executive Directors related to the compliance with and enforcement of the Deed of Non-competition in our annual report, or by way of announcement according to the Listing Rules; and
(c) it will make a declaration to our Company and our independent non-executive Directors annually regarding its compliance with the Deed of Non-competition for us to disclose in our annual report.

The Covenantors have been informed that our Company will also adopt the following procedures to make sure that the undertakings under the Deed of Non-competition are observed by the Covenantors:

(a) we will provide to our independent non-executive Directors the Offer Notice within fifteen days of receipt;
(b) our independent non-executive Directors will report in our announcement or annual report after Listing (i) their findings on the compliance by the Covenantors and/or their respective close associates of the Deed of Non-competition; and (ii) any decision made in relation to the Offer Notice and the basis of such decision; and
(c) our independent non-executive Directors may, if considered necessary, engage, at the cost of the Company, professional advisors to provide advice in connection with decision relating to the Offer Notice.

Each of our Directors confirms that he or she is not interested in any business apart from our Group’s business, which competes or is likely to compete, either directly or indirectly, with our Group’s business.

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INDEPENDENCE FROM THE CONTROLLING SHAREHOLDERS

Having considered the matters described above and the following factors, we believe that our Group is capable of carrying on its business independently of the Controlling Shareholders and his/her respective close associates after completion of the [REDACTED]:

Management independence

Our Board comprises four executive Directors and three independent non-executive Directors. Mr. Ruan Hongliang, a Controlling Shareholder of our Company, is one of our executive Directors, the chairman of the Board and the general manager of our Company. Ms. Jiang Jinhua, the other Controlling Shareholder of our Company, is an executive Director, deputy chairman of the Board and a deputy general manager of our Company. Ms. Ruan Zeyun, the daughter of Mr. Ruan Hongliang and Ms. Jiang Jinhua, serves as our Board secretary and chief financial officer of our Company and Mr. Zhao Xiaofei, spouse of Ms. Ruan Zeyun, also serves as a deputy general manager of our Company.

Save as disclosed above, no other Controlling Shareholder or their respective close associates holds any directorship in our Company. Each of our Directors is aware of his/her fiduciary duties as a Director of our Company which requires, among other things, that he/she acts for the benefit and in the best interests of our Company and does not allow any conflict between his/her duties as a Director and his/her personal interest. In the event that there is a potential conflict of interest arising out of any transaction to be entered into between our Group and our Directors or their respective close associates, the interested Director(s) shall abstain from voting at the relevant board meetings of our Company in respect of such transactions and shall not be counted in the quorum.

Having considered the above factors, including the fact that the majority of our Board and senior management team of our Group are independent from the Controlling Shareholders, our Directors are satisfied that they are able to perform their roles in our Company independently, and our Directors are of the view that we are capable of managing our business independently from the Controlling Shareholders following the completion of the [REDACTED].

Operational independence

We conduct our business activities independent from our Controlling Shareholders. Our Group has established our own organizational structure comprised of individual departments, each with specific area of responsibilities. We have also established a set of internal control procedures to facilitate the effective operation of our business.

Therefore, we believe that we are capable of carrying on our business independently of the Controlling Shareholders and his/her respective close associates.

Financial independence

Our Group has an accounting and financial system independent of our Controlling Shareholders and makes financial decisions according to our Group’s own business needs. Our Group’s accounting and finance functions are independent of our Controlling Shareholders. As of the three years ended December 31, 2014 and as of May 31, 2015, our Controlling Shareholders provided guarantees in

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favor of us in connection of bank loans with principal amounts of RMB975.4 million, RMB708.0 million, RMB644.7 million and RMB687.7 million, respectively. All of the guarantees given by our Controlling Shareholders have been released on June 3, 2015, other than the guarantee given for a syndicated loan with a principal amount of RMB40.0 million, which has been released as at August 3, 2015. In addition, as of May 31, 2015, Mr. Ruan Hongliang, one of our Controlling Shareholders has a loan due from us in the form of an entrusted loan with a principal amount of RMB31.0 million at an interest rate of 5.88% per annum. As of the Latest Practicable Date, such amount had been repaid in full. Our Directors confirm that our Group does not intend to obtain any further borrowing from any of the Controlling Shareholders or to rely on their guarantees or pledges. Therefore, there is no financial dependence on our Controlling Shareholders.

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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Members of Our Board

The following table sets forth certain information regarding members of our Board:

Name Mr. Ruan Hongliang (阮洪良先生) . . Ms. Jiang Jinhua (姜瑾華女士) . . Mr. Wei Yezhong (魏葉忠先生) . Mr. Shen Qifu (沈其甫先生) . Ms. Pan Yushuang (潘煜雙女士) . Mr. Li Shilong (李士龍先生) . Mr. Ng Ki Hung (吳其鴻先生) . .	Age 54 54 43 49 51 62 62	Date of joining our Group June 1998 June 2000 June 1998 September 1999 August 2009 July 2012 January 2015	Current position Chairman, executive Director and general manager Deputy chairman, executive Director and deputy general manager Executive Director and deputy general manager Executive Director Independent non-executive Director Independent non-executive Director Independent non-executive Director	Date of appointment of current term of office September 30, 2015 September 30, 2015 September 30, 2015 September 30, 2015 September 30, 2015 September 30, 2015 September 30, 2015	Roles and responsibilities Relationship with other Directors/Supervisors/ senior management Overall corporate strategies formulation, management of business and operation of our Group Spouse of Ms. Jiang Jinhua, father of Ms. Ruan Zeyun and father-in-law of Mr. Zhao Xiaofei Assisting Mr. Ruan Hongliang to discharge his duties as the general manager of our Company Spouse of Mr. Ruan Hongliang, mother of Ms. Ruan Zeyun and mother-in-law of Mr. Zhao Xiaofei Management of our architectural glass business department N/A Management of the business and operation of Zhejiang Flat N/A Providing independent views on management of our Group N/A Providing independent views on management of our Group N/A Providing independent views on management of our Group N/A	Roles and responsibilities Relationship with other Directors/Supervisors/ senior management Overall corporate strategies formulation, management of business and operation of our Group Spouse of Ms. Jiang Jinhua, father of Ms. Ruan Zeyun and father-in-law of Mr. Zhao Xiaofei Assisting Mr. Ruan Hongliang to discharge his duties as the general manager of our Company Spouse of Mr. Ruan Hongliang, mother of Ms. Ruan Zeyun and mother-in-law of Mr. Zhao Xiaofei Management of our architectural glass business department N/A Management of the business and operation of Zhejiang Flat N/A Providing independent views on management of our Group N/A Providing independent views on management of our Group N/A Providing independent views on management of our Group N/A
						Spouse of Ms. Jiang Jinhua, father of Ms. Ruan Zeyun and father-in-law of Mr. Zhao Xiaofei Spouse of Mr. Ruan Hongliang, mother of Ms. Ruan Zeyun and mother-in-law of Mr. Zhao Xiaofei N/A N/A N/A N/A N/A

Executive Directors

Mr. Ruan Hongliang (阮洪良先生) , aged 54, is a founder of our Group. He is currently an executive Director and the chairman of Board and the general manager of our Company, mainly responsible for the overall corporate strategies formulation, management of business and operation of our Group. Mr. Ruan graduated from Jiaxing First High School (嘉興市第一中學) in July 1978.

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Mr. Ruan has over 30 years’ experience in glass industry. Mr. Ruan served in our predecessor as a Director from June 1998 to December 2005, the deputy chairman of the Board from June 1998 to February 1999 and as the chairman of the Board from March 1999 to May 2000 and from September 2003 to December 2005, respectively. Mr. Ruan also served as the deputy general manager of our predessor from May 2000 to September 2003. Mr. Ruan has served in our Company as the chairman of the Board and the general manager since December 2005. Mr. Ruan also serves in our subsidiaries. He has been a director and general manager of Shanghai Flat since June 2006, of Zhejiang Jiafu since August 2007, of Anhui Flat Materials since January 2011, of Anhui Flat Glass since January 2011, of Zhejiang Flat since February 2011 and of Flat New Energy since March 2014. He has also been a director of Flat HK since January 2013.

Outside of our Group, Mr. Ruan worked as plant manager of Jiaxing Glassware Plant (嘉興市玻璃製品廠) from September 1984 to May 2000. Mr. Ruan has also served as a director of Jiaxing Xiuzhou District Lianhui Venture Capital Co., Ltd. (嘉興市秀洲區聯會創業投資有限公司) since June 2009.

Mr. Ruan also serves in various industry and business associations. He has served as a standing vice-chairman of Zhejiang Provincial Glass Industry Association (浙江省玻璃行業協會) since April 2009, a vice-chairman of Jiaxing City Entrepreneur Association (嘉興市企業家協會) and Jiaxing City Chamber of Commerce (嘉興市工商業聯合會) since October 2010 and December 2011, respectively. Mr. Ruan has received several awards during the past years, including but not limited to, “the Advanced Participants in Association Activities in the Year 2012 (2012年度協會活動先進工作者)” granted by China Architectural and Industrial Glass Association (中國建築玻璃與工業玻璃協會) in March 2013, “Excellent Entrepreneur of Small and Medium Enterprises in Zhejiang Province (浙江省中小企業優秀企業家)” granted by Association of Small and Medium Enterprises in Zhejiang Province (浙江省中小企業協會) and Selection Committee of Excellent Entrepreneur of Small and Medium Enterprises in Zhejiang Province (浙江省中小企業優秀企業家評選委員會) in December 2012, and “Jiaxing Charity Award in the Year 2011 (2011年度嘉興慈善獎)” granted by Jiaxing Municipal People’s Government in December 2011. In addition, Mr. Ruan was also awarded as “The Innovative Pioneer People of Small and Medium Enterprises in the PRC (中國中小企業創新先鋒人物)” granted by Association of Small and Medium Enterprises in the PRC (中國中小企業協會) and Selection Committee of Innovative Products among the PRC Enterprises (中國企業創新成果案例審定委員會) in October 2011, and one of Mr. Ruan’s research results was awarded as “Top 100 Innovative & Excellent Research Results of Small and Medium Enterprises in the PRC* (2011年中國中小企業創新100強／優秀創新成果)” by same institutions in October 2011.

Mr. Ruan is the spouse of Ms. Jiang Jinhua, father of Ms. Ruan Zeyun and father-in-law of Mr. Zhao Xiaofei. As of the Latest Practicable Date, Mr. Ruan held RMB109,839,600 registered capital of our Company, representing approximately 32.54% of our registered capital.

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Ms. Jiang Jinhua (姜瑾華女士) , formerly known as Ms. Jiang Jin’e (姜瑾娥), aged 54, joined our Group in June 2000 and is currently an executive Director, the deputy chairman of Board and a deputy general manager of our Company, mainly responsible for assisting Mr. Ruan Hongliang to discharge his duties as the general manager of our Company. Ms. Jiang graduated from Arizona State University in the United States in May 2013 with a master degree in business management (long distance learning).

Ms. Jiang has over 22 years’ experience in glass industry. She chaired the Board from June 2000 to September 2003 and served as the deputy general manager of our predecessor from September 2003 to December 2005. Ms. Jiang has also served as our deputy chairman of Board since December 2005. She has been a deputy general manager of our Company since June 2009. She served as a director of Zhejiang Jiafu and Anhui Flat Materials, our subsidiaries, from August 2007 to March 2014 and from January 2011 to March 2014, respectively. She also served as the executive deputy general manager of Zhejiang Jiafu from February 2012 to November 2012.

Outside of our Group, Ms. Jiang has been the legal representative of Jiaxing Xiucheng District Construction Project Co., Ltd. (嘉興市秀城區建設建築工程公司) since September 1993 and was a supervisor of Jiaxing Glassware Plant (嘉興市玻璃製品廠) from August 1998 to August 2009. Ms. Jiang served as a supervisor of Jiaxing City Fute Safety Glass Co., Ltd.[] (嘉興市福特安全玻璃有限公司) from November 2003 to August 2008. Ms. Jiang was awarded as “Excellent Female Entrepreneur in Jiaxing (嘉興市優秀女企業家)” by Female Association of Jiaxing (嘉興市婦女聯合會) and Association of Female Entrepreneur in Jiaxing (嘉興市女企業家協會) in December 2012. Ms. Jiang is also the vice-chairman of Association for Female Entrepreneur of Xiuzhou District of Jiaxing* (嘉興市秀洲區企業家協會).

Ms. Jiang is the spouse of Mr. Ruan Hongliang, mother of Ms. Ruan Zeyun and mother-in-law of Mr. Zhao Xiaofei. As of the Latest Practicable Date, Ms. Jiang held RMB81,020,400 registered capital of our Company, representing approximately 24.01% of our registered capital.

Mr. Wei Yezhong (魏葉忠先生) , aged 43, a co-founder of our Group and is currently an executive Director and a deputy general manager of our Company, mainly responsible for management of our architectural glass business department. Mr. Wei graduated from Jiaxing Advanced Vocational College (嘉興市高等專科學校) in Jiaxing City, Zhejiang Province, the PRC, in July 1992. Mr. Wei has been an assistant engineer recognized by Jiaxing Municipal Bureau of Personnel, Zhejiang Province (浙江省嘉興市人事局), now known as Jiaxing Municipal Bureau of Human Resources and Social Security (嘉興市人力資源與社會保障局), since August 2000, and an engineer recognized by Jiaxing Municipal Bureau of Human Resources and Social Security since February 2013. Mr. Wei has also been an expert member of the building curtain wall risk-based detection committee of detection technology branch of the Chinese Ceramic Society (中國硅酸鹽學會測試技術分會建築幕牆風險檢測技術委員會) since March 2015.

Mr. Wei has over 20 years’ experience in glass industry. He served in our predecessor as a sales manager from March 2003 to September 2010. He has been serving as a deputy general manager of our Company since July 2009 and a Director since August 2009. He also served as the chairman of the board of Supervisors of our Company from December 2005 to June 2009 and served as the executive deputy general manager of Zhejiang Flat from February 2012 to January 2013.

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Outside of our Group, Mr. Wei worked at production position in Jiaxing Bakenaier Glassware Co., Ltd.* (嘉興巴克耐爾玻璃製品有限公司) from September 1994 to September 2001.

As of the Latest Practicable Date, Mr. Wei held RMB4,815,000 registered capital of our Company, representing approximately 1.43% of our registered capital.

Mr. Shen Qifu (沈其甫先生) , aged 49, joined our Group in September 1999 and is currently an executive Director of our Company, mainly responsible for management of the business and operation of Zhejiang Flat. Mr. Shen graduated from Shanghai University of Engineering Science* (上海工程技術大學) in Shanghai, the PRC, in January 1987, majoring in machinery manufacturing and equipment.

Mr. Shen has over 15 years’ experience in glass industry. Ms. Shen served successively as workshop manager and deputy manager of production department in our predecessor from September 1999 to December 2001. He also served in our predecessor as a brand management manager from December 2001 to August 2010. He served as a Supervisor of our Company from December 2005 to June 2009 and as the chairman of the board of Supervisors of our Company from June 2009 to January 2015. Mr. Shen also served or serves in our subsidiaries. He successively served as a manager of processing production department, an assistant general manager and a deputy general manager of Zhejiang Jiafu from August 2010 to May 2012. He also served as a deputy general manager of Zhejiang Flat from May 2012 to January 2014. He has served as the executive deputy general manager of Zhejiang Flat since January 2014.

As of the Latest Practicable Date, Mr. Shen held RMB3,210,000 registered capital of our Company, representing approximately 0.95% of our registered capital.

Independent Non-Executive Directors

Ms. Pan Yushuang (潘煜雙女士) , aged 51, joined our Group in August 2009 and is currently an independent non-executive Director of our Company. Ms. Pan graduated from Central South University of Technology (中南工業大學, the predecessor of Central South University (中南大學)) in Changsha City, Hunan Province, the PRC, in March 1996 with a master degree in engineering and furthered her study in Macao University of Science and Technology (澳門科技大學) in Macao, where she graduated with a doctor degree in management (finance) in January 2007. She has been a professor recognized by Zhejiang Provincial Department of Personnel (浙江省人事廳), now known as Zhejiang Province Human Resources and Social Security Bureau* (浙江省人力資源與社會保障局), since November 2005.

Ms. Pan has served as an independent Director of our Company since August 2009. Ms. Pan has been long dedicated to education of accounting and has over 10 years’ experience of accounting and finance. She has served as a professor of accounting in Jiaxing College (嘉興學院) since 2005. She was hired as 2013 Exam Proposition (Analyzation) Expert for the National Professional Qualification Exam of Accounting (2013年度全國會計專業技術資格考試命（審）題專家) by the Leading Group Office of the National Professional Qualification Exam of Accounting (全國會計專業技術資格考試領導小組辦公室) and the Accounting Qualification Assessment Center of Ministry of Finance (財政部會計資格評價中心) in July 2013. She was awarded by Zhejiang Provincial Bureau of Education*

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(浙江省教育廳) as one of the Young and Middle-aged Academic Leaders in Institutions of Higher Education in Zhejiang Province (浙江高校中青年學科帶頭人) in January 2008, and as one of Distinguished Teachers in Institutions of Higher Education in Zhejiang province (浙江高等學校教學名師) in March 2011. She has also served as a member of Committee of Professional Education of Accounting under Accounting Society of China* (中國會計學會會計教育專業委員會) since May 2010.

Ms. Pan served as an independent non-executive director of Zhejiang Jingxing Paper Joint Stock Co., Ltd. (浙江景興紙業股份有限公司) (listed on Shenzhen Stock Exchange, stock code: 002067) from September 2007 to September 2013. She currently serves as an independent non-executive director in three listed companies, including Zhejiang Qianjiang Biochemical Co., Ltd. (浙江錢江生物化學股份有限公司) (listed on Shanghai Stock Exchange, stock code: 600796) since June 2013, Zhejiang Jingxin Pharmaceutical Co., Ltd. (浙江京新藥業股份有限公司) (listed on Shenzhen Stock Exchange, stock code: 002020) since October 2013 and Zhejiang Jiaxin Silk Co., Ltd. (浙江嘉欣絲綢股份有限公司) (listed on Shenzhen Stock Exchange, stock code: 002404) since July 2014.

Mr. Li Shilong (李士龍先生) , aged 62, joined our Group in July 2012 and is currently an independent non-executive Director of our Company. Mr. Li graduated from the Correspondence College of China’s Communist Party School (中共中央黨校函授學院) in June 1991, majoring in economic management. Mr. Li has been a senior engineer recognized by National Nuclear Safety Administration (國家核安全局) since July 1995.

Mr. Li served as a deputy head, the section head and deputy party secretary of the office of Nuclear Safety Bureau under State Scientific and Technological Commission (國家科委國家核安全辦公室) successively from June 1996 to October 1998, as a deputy director-general-level cadre (副司局級幹部) of Party Committee of State Administration of Environmental Protection (國家環境保護總局機關黨委) from October 1998 to August 2005 and has served as the vice chairman of Recycling Metal Branch under China Nonferrous Metals Industry Association (中國有色金屬工業協會再生金屬分會) since January 2006.

Mr. Ng Ki Hung (吳其鴻先生) , aged 62, joined our Group in January 2015 and is currently an independent non-executive Director of our Company.

Mr. Ng has served as an executive director of Jinhui Holdings Company Limited (金輝集團有限公司) (listed on the Stock Exchange, stock code: 137) and Jinhui Shipping and Transportation Limited (listed on Oslo Stock Exchange, stock code: JIN) since August 1991 and May 1994, respectively.

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BOARD OF SUPERVISORS

The following table sets forth certain information regarding members of our board of Supervisors:

Name Mr. Zheng Wenrong (鄭文榮先生) . . Mr. Shen Fuquan (沈福泉先生) . . Mr. Zhu Quanming (祝全明先生) . . Ms. Zhang Hongming (張紅明女士) . . Mr. Meng Lizhong (孟利忠先生) . .	Age 52 56 62 42 32	Date of joining our Group June 1998 June 1998 June 1998 March 2003 May 2005	Current position Chairman of the board of Supervisors Supervisor Supervisor Supervisor Supervisor	Date of appointment of current term of office September 30, 2015 September 30, 2015 September 30, 2015 September 30, 2015 September 30, 2015	Roles and responsibilities Monitoring and supervising our operational and financial activities Monitoring and supervising our operational and financial activities Monitoring and supervising our operational and financial activities Monitoring and supervising our operational and financial activities Monitoring and supervising our operational and financial activities	Relationship with other Directors/ Supervisors/senior management
						N/A N/A N/A N/A N/A

Mr. Zheng Wenrong (鄭文榮先生) , aged 52, a co-founder of our Group, is currently the chairman of the board of Supervisors of our Company. Mr. Zheng graduated from Jiaxing First High School* (嘉興市第一中學) in June 1979.

Mr. Zheng has over 16 years’ experience in glass industry. He served as the chairman of the Board, the deputy chairman of the Board and the manager of domestic sales of our predecessor from May 2000 to June 2000, from June 2000 to December 2005 and from June 1998 to February 2008, respectively. He served as a Director and the deputy general manager of PV glass business department of our Company from December 2005 to January 2015 and from August 2011 to March 2012, respectively. And he has served as the deputy head of the president’s office of our Company since March 2012. Mr. Zheng also served in our subsidiaries. He served as a deputy general manager of Zhejiang Jiafu and a director of Anhui Flat Materials from February 2008 to September 2010 and from January 2011 to March 2014, respectively.

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Outside of our Group, Mr. Zheng worked as a director and the chairman of the board of directors of Jiaxing Glassware Plant* (嘉興市玻璃製品廠) from August 1998 to May 2000 and from May 2000 to August 2009, respectively.

As of the Latest Practicable Date, Mr. Zheng held RMB14,445,000 registered capital of our Company, representing approximately 4.28% of our registered capital.

Mr. Shen Fuquan (沈福泉先生) , aged 56, a co-founder of our Group, is currently a Supervisor of our Company.

Mr. Shen has over 15 years’ experience in glass industry. He served as a Director, the deputy chairman of the Board and a manager of sales department I in our predecessor from May 2000 to June 2000, from May 2000 to June 2000 and from December 2001 to December 2005, respectively. Mr. Shen served as a Director of our Company from December 2005 to January 2015 and has been a manager of procurement department since November 2011. Mr. Shen also served in our subsidiaries. He served as a manager of procurement department of Shanghai Flat from January 2006 to November 2008 and a director of Anhui Flat Glass from January 2011 to March 2014.

Outside of our Group, Mr. Shen served as a supervisor of Jiaxing Glassware Plant (嘉興市玻璃製品廠) from August 1998 to August 2009. He also served as a director of Jiaxing Flat Glass Mirror Co., Ltd. (嘉興福萊特鏡業有限公司) from July 2000 to December 2008.

As of the Latest Practicable Date, Mr. Shen held RMB9,630,000 registered capital of our Company, representing approximately 2.85% of our registered capital.

Mr. Zhu Quanming (祝全明先生) , aged 62, a co-founder of our Group, is currently a Supervisor of our Company.

Mr. Zhu has over 16 years’ experience in glass industry. He served as a supervisor and manager of retail department of our predecessor from June 1998 to December 2005 and a manager of production department of our Company from December 2005 to September 2010, respectively. He served in our Company as a Director from December 2005 to January 2015, as a deputy general manager from June 2009 to May 2011 and as a deputy general manager of processed glass business department from September 2010 to February 2012. Mr. Zhu also served or serves in our subsidiaries. He served as the executive deputy general manager of Shanghai Flat from February 2012 to November 2012 and served as a supervisor of Anhui Flat Materials from January 2011 to March 2014. He also served as a deputy general manager of Zhejiang Jiafu from November 2012 to January 2015.

Outside of our Group, Mr. Zhu served as a director of Jiaxing Flat Mirror Co., Ltd.* (嘉興福萊特鏡業有限公司) from July 2000 to December 2008.

As of the Latest Practicable Date, Mr. Zhu held RMB 9,630,000 registered capital of our Company, representing approximately 2.85% of our registered capital.

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Ms. Zhang Hongming (張紅明女士) , aged 42, joined our Group in March 2003 and is currently a Supervisor of our Company. In July 1998, Ms. Zhang graduated from Jiaxing Secondary Specialized School of Broadcasting and Television* (嘉興市廣播電視中等專業學校) in Jiaxing City, Zhejiang Province, the PRC, majoring in finance and accounting.

Ms. Zhang served as the head of planning department of our Company from March 2003 to September 2010, a general manager assistant of processed glass business department of our Company from September 2010 to February 2012, a general manager assistant of Zhejiang Flat from February 2012 to January 2013 and a deputy manager of production of Zhejiang Flat from January 2013 to September 2014. She has served as a deputy manager of credit control department in finance center of our Company since September 2014.

Before joining our Group, Ms. Zhang worked at Jiaxing Bakenaier Glassware Co., Ltd.* (嘉興巴克耐爾玻璃製品有限公司) from January 1994 to September 2000.

Mr. Meng Lizhong (孟利忠先生) , aged 32, joined our Group in May 2005 and is currently a Supervisor of our Company. Mr. Meng graduated from the Correspondence College of China’s Communist Party School* (中共中央黨校函授學院), majoring in public administration in December 2008.

Mr. Meng has over 10 years’ experience in glass industry. Mr. Meng served as a salesman of the Company from May 2005 to May 2009, a manager assistant of our external sales department from May 2009 to September 2010, a deputy manager of our external sales department from September 2010 to February 2012 and a deputy manager of our sales center from February 2012 to August 2013. He has served as our sales manager of the sales department of Zhejiang Flat since August 2013. He has also served as a general manager assistant of Zhejiang Flat since January 2015.

SENIOR MANAGEMENT

Name Mr. Wei Zhiming (韋志明先生). . . . Mr. Zhao Xiaofei (趙曉非先生). . . .	Age 46 30	Date of joining our Group August 2006 May 2011	Current position Deputy general manager Deputy general manager	Date of appointment of current term of office September 30, 2015 September 30, 2015	Roles and responsibilities Management of PV glass business department and technology research and development of our Group Management of the business and operation of Zhejiang Jiafu	Relationship with other Directors /Supervisors/senior management
						N/A Spouse of Ms. Ruan Zeyun and son-in-law of Mr. Ruan Hongliang and Ms. Jiang Jinhua

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Name Ms. Ruan Zeyun (阮澤雲女士). . . .	Age 28	Date of joining our Group October 2009	Current position Chief financial officer and Board secretary	Date of appointment of current term of office September 30, 2015	Roles and responsibilities Daily affairs of the Board and management of our finance center	Relationship with other Directors /Supervisors/senior management
						Spouse of Mr. Zhao Xiaofei and daughter of Mr. Ruan Hongliang and Ms. Jiang Jinhua

Mr. Wei Zhiming (韋志明先生) , aged 46, joined our Group in August 2006 and is currently the deputy general manager of our Company, mainly responsible for the management of PV glass business department and technology research and development of our Group. Mr. Wei graduated from Hangzhou University* (杭州大學) in Hangzhou City, Zhejiang Province, the PRC, in July 1991 with a bachelor degree in chemistry.

Mr. Wei has over 23 years’ experience in glass industry. He has served as a deputy general manager of the Company and the general manager of PV glass business department of our Company since May 2011 and February 2012, respectively. He served successively as assistant to president and deputy manager of technology research and development center of our Company from May 2011 to June 2011. He also served as the deputy general manager of Shanghai Flat and the executive deputy general manager of Zhejiang Jiafu from August 2006 to February 2008 and from February 2008 to February 2012, respectively. Mr. Wei is also a member of PV Specialized Committee of China Architectural and Industrial Glass Association (中國建築玻璃與工業玻璃協會光伏玻璃專業委員會). In October 2011, one of the research results Mr. Wei participated in was awarded as “Top 100 Innovative & Excellent Research Results of Small and Medium Enterprises in the PRC (2011年中國中小企業創新100強／優秀創新成果)” by Assoication of Small and Medium Enterpises in the PRC (中國中小企業協會) and Selection Committee of Innovative Products among the PRC Enterprises (中國企業創新成果案例審定委員會).

Prior to joining our Group, he started his career working as the deputy plant manager of Huzhou Glass Plant* (湖州玻璃廠) from August 1991 to June 2001.

As of the Latest Practicable Date, Mr. Wei held RMB3,210,000 registered capital of our Company, representing approximately 0.95% of our registered capital.

Mr. Zhao Xiaofei (趙曉非先生) , aged 30, joined our Group in May 2011 and is currently the deputy general manager of our Company, mainly responsible for the management of the business and operation of Zhejiang Jiafu. Mr. Zhao graduated from the University of Northern Virginia in the United States in December 2007 with a bachelor degree in science in business administration (long distance learning).

Mr. Zhao served as assistant to manager of PV glass sales department of sales center of our Company and assistant to general manager of sales center of our Company from May 2011 to July 2011 and from July 2011 to February 2012, respectively, a deputy general manager of float glass business department of our Company from November 2012 to February 2013, as well as deputy general

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manager of sales center of our Company from February 2013 to July 2013. He also served as assistant to general manager of Zhejiang Jiafu from February 2012 to August 2012. He served as a deputy general manager of Zhejiang Jiafu from August 2012 to November 2012. He has served as the executive deputy general manager of Zhejiang Jiafu and a deputy general manager of our Company since July 2013 and January 2015, respectively.

Prior to joining our Group, Mr. Zhao worked as a sales manager for Zhejiang Newfine Industry Co., Ltd.* (浙江新正方實業股份有限公司) from May 2008 to April 2011.

Mr. Zhao is the spouse of Ms. Ruan Zeyun and son-in-law of Mr. Ruan Hongliang and Ms. Jiang Jinhua. As of the Latest Practicable Date, Mr. Zhao held RMB1,200,000 registered capital of our Company, representing approximately 0.36% of our registered capital.

Ms. Ruan Zeyun (阮澤雲女士) , formerly known as Ms. Ruan Xiao (阮曉), aged 28, joined our Group in October 2009 and is currently the chief financial officer and Board secretary of our Company, mainly responsible for the daily affairs of the Board and the management of our finance center. Ms. Ruan graduated from Sheffield University in England in September 2009 with a master degree in management.

Ms. Ruan served as the Board secretary and the chief financial officer of our Company since April 2010 and since November 2013, respectively. She also served or serves in our subsidiaries. She served as an assistant to general manager of Shanghai Flat from October 2009 to January 2011 and has served as the executive deputy general manager of Shanghai Flat from January 2010 to December 2011. She served as a director of Anhui Flat Glass from January 2011 to March 2014. Ms. Ruan also serves in several industry and business associations. She is a member of PV Specialized Committee of China Architectural and Glass Association (中國建築玻璃與工業玻璃協會光伏玻璃專業委員會) and a member of Youth Association in Jiaxing (嘉興市青年聯合會).

Ms. Ruan is also interested in 100%, and a director of Yihe Energy. For details, please refer to the section headed “Relationship with Controlling Shareholders — Interests of Ms. Ruan Zeyun”.

Ms. Ruan is the spouse of Mr. Zhao Xiaofei and daughter of Mr. Ruan Hongliang and Ms. Jiang Jinhua. As of the Latest Practicable Date, Ms. Ruan held RMB87,633,000 registered capital of our Company, representing approximately 25.97% of our registered capital.

Save as disclosed herein, to the best of the knowledge, information and belief of our Directors having made all reasonable enquiries, (i) each Director, Supervisor and senior management has not held any directorships in the last three years in any public companies the securities of which are listed on any securities market in Hong Kong or overseas; and (ii) there was no other matter with respect to the appointment of our Directors, Supervisors and senior management that needs to be brought to the attention of the Shareholders and there was no information relating to our Directors, Supervisors and chief executive that is required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules as of the Latest Practicable Date.

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JOINT COMPANY SECRETARIES

Ms. Ruan Zeyun (阮澤雲) , formerly known as Ms. Ruan Xiao (阮曉), aged 28, joined our Group in October 2009 and was appointed as a joint company secretary on April 1, 2015. For details of biographies of Ms. Ruan Zeyun, please refer to the subsection headed “Senior Management” above.

Ms. Leung Wing Han Sharon (梁穎嫻) , was appointed as a joint company secretary of our Company on April 1, 2015. She is a vice president of SW Corporate Services Group Limited. She has over 10 years of experience in finance, accounting and company secretarial matters. Ms. Leung holds degrees of Bachelor Business Administration in Accounting, Bachelor of Laws, and Master of Laws in International Corporate and Financial Law. She is a fellow member of the Hong Kong Institute of Chartered Secretaries, the Institute of Chartered Secretaries and Administrators in UK, and the Association of Chartered Certified Accountants in UK. She is also a member of the Hong Kong Institute of Certified Public Accountants.

BOARD COMMITTEES

Audit Committee

We have established an audit committee with written terms of reference pursuant to the Board meeting on October 16, 2015 in compliance with Rule 3.21 of the Listing Rules and paragraph C.3 of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules. The audit committee consists of three Directors: Ms. Pan Yushuang, Mr. Li Shilong and Mr. Ng Ki Hung. Ms. Pan Yushuang currently serves as the chairman of the audit committee. The primary responsibilities of the audit committee are to review and supervise our financial reporting process, which include, among other things:

reviewing our annual and interim financial statements, earnings releases, critical accounting policies and practices used to prepare financial statements, alternative treatments of financial information, the effectiveness of our disclosure controls and procedures and important trends and developments in financial reporting practices and requirements;
reviewing the planning and staffing of internal audits, the organization, responsibilities, plans, results, budget and staffing of our internal audit team and the quality and effectiveness of our internal controls;
reviewing our risk assessment and management policies; and
establishing procedures for the treatment of complaints received by us regarding accounting, internal accounting controls, auditing matters, potential violations of law and questionable accounting or auditing matters.

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Remuneration committee

We have established a remuneration committee with written terms of reference pursuant to the Board meeting on October 16, 2015 in compliance with paragraph B.1 of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules. The remuneration committee of our Company consists of three Directors: Ms. Pan Yushuang, Mr. Ruan Hongliang and Mr. Li Shilong. Ms. Pan Yushuang currently serves as the chairman of our Company’s remuneration committee. The primary responsibilities of the remuneration committee are to formulate the evaluation standards and conduct evaluation of the Directors and senior management, and to determine, and review the compensation policies and schemes for the Directors and senior management, including, among other things:

approving and overseeing the total compensation package for the Directors and senior management, evaluating the performance of and determining and approving the compensation to be paid to senior management;
reviewing and making recommendations to the Board with respect to the Directors’ compensation; and
reviewing and making recommendations to the Board regarding our Company’s policy and structure for the remuneration of all Directors and senior management.

Nomination committee

We have established a nomination committee with written terms of reference pursuant to the Board meeting on October 16, 2015 in compliance with the Corporate Governance Code as set out in Appendix 14 to the Listing Rules. The nomination committee of our Company consists of three Directors: Mr. Ruan Hongliang, Ms. Pan Yushuang and Mr. Ng Ki Hung. Mr. Ruan Hongliang currently serves as the chairman of the nomination committee. The primary responsibilities of our Company’s nomination committee are to formulate the nomination procedures and standards for candidates for Directors and senior management, to conduct preliminary review of the qualifications and other credentials of the candidates for Directors and senior management.

Strategic development committee

We have established a strategic development committee with written terms of reference pursuant to the Board meeting on October 16, 2015. The strategic development committee of our Company consists of three Directors: Mr. Ruan Hongliang, Mr. Wei Yezhong and Ms. Pan Yushuang. Mr. Ruan Hongliang serves as the chairman of the strategic development committee. The primary responsibilities of our strategic development committee are to study, advise on and review our Company’s long-term development plans and strategies.

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Risk management committee

We have established a risk management committee with written terms of reference pursuant to the Board meeting on October 16, 2015. The risk management committee of our Company consists of three Directors: Mr. Ruan Hongliang, Ms. Jiang Jinhua and Ms. Pan Yushuang. Mr. Ruan Hongliang serves as the chairman of the risk management committee. The primary responsibilities of our risk management committee are to review our Group’s business operations, in particular overseas and export business, to monitor and control our Group’s sanction risk level and to formulate our Group’s risk management strategies.

See also “Business — Regulatory Compliance and Legal Processings — International Sanctions on Our Sales to Russia, Belarus and Tunisia — Internal Control Measures” for further information of our risk management committee.

COMPENSATION OF THE DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES

For the three years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015, the aggregate amount of fees, salaries, allowances, discretionary bonus, pension-defined contribution plans and other benefits in kind (if applicable) paid by us to our Directors and Supervisors were approximately RMB2.65 million, RMB3.00 million, RMB2.58 million and RMB1.24 million, respectively.

Our Directors’ and Supervisors’ remuneration is determined with reference to salaries paid by comparable companies, their experience, their responsibilities and their performance.

The remuneration and benefits in kind (if applicable) received by the top five highest paid individuals (including Directors and Supervisors) for the three years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015 were approximately RMB2.44 million, RMB2.95 million, RMB2.46 million and RMB1.13 million, respectively.

During the Track Record Period, no remuneration was paid by us to, or receivable by, our Directors, Supervisors or the five highest-paid individuals as an inducement to join or upon joining our Company. No compensation was paid by us to, or receivable by, our Directors, past Directors, our Supervisors, past Supervisors or the five highest-paid individuals for each of the Track Record Period for the loss of any office in connection with the management of the affairs of any subsidiary of our Company.

None of our Directors or Supervisors waived any remuneration for any of the last three years. Save as disclosed above, no other payments have been paid, or are payable, by us or any of our subsidiaries to our Directors, Supervisors or the five highest-paid individuals during the Track Record Period.

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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Under the remuneration policy of our Company, the remuneration committee will consider factors such as salaries paid by comparable companies, tenure, commitment, responsibilities and performance of our Directors, Supervisors and the senior management as the case may be, in assessing the amount of remuneration payable to our Directors, Supervisors and such employees. It is estimated that under the arrangements currently in force, the aggregate remuneration payable to the Directors and Supervisors for the year ending December 31, 2015, is estimated to be approximately RMB2.14 million and RMB1.09 million, respectively.

COMPLIANCE ADVISOR

We have appointed Messis Capital Limited as our compliance advisor, pursuant to Rule 3A.19 and 19A.05 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, the compliance advisor will advise us in the following circumstances:

(a) before the publication of any regulatory announcement, circular or financial report;
(b) where a transaction, which might be a notifiable or connected transaction under the Listing Rules, is contemplated, including share issues and share repurchases;
(c) where we propose to use the proceeds of the [REDACTED] in a manner different from that detailed in this document or where our Group’s business activities, developments or results of operation deviate from any forecast, estimate or other information in this document; and
(d) where the Hong Kong Stock Exchange makes an inquiry of our Company under Rule 13.10 of the Listing Rules.

Pursuant to Rule 19A.06 of the Listing Rules, Messis Capital Limited will, in a timely manner, inform us of any amendment or supplement to the Listing Rules that are announced by the Stock Exchange. Messis Capital Limited will also inform us of any amendment or supplement to applicable laws and guidelines.

The term of the appointment will commence on the Listing Date and end on the date on which we comply with Rule 13.46 of the Listing Rules in respect of our financial results for the first full financial year commencing after the Listing.

CORPORATE GOVERNANCE

Our Company has complied with the code provisions of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules with the exception of code provision A.2.1, which requires the roles of chairman and chief executive be held by different individuals.

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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Under code provision A.2.1 of the Corporate Governance Code, the roles of chairman and chief executive should be separate and should not be performed by the same individual. Mr. Ruan Hongliang currently holds both positions. Throughout our business history of over 15 years, Mr. Ruan has held the key leadership position of our Group and has been deeply involved in the formulation of corporate strategies and management of business and operations of our Group. Taking into account the consistent leadership within our Group and in order to enable more effective and efficient overall strategic planning and continuation of the implementation of such plans, our Directors (including our independent non-executive Directors) consider that Mr. Ruan is the best candidate for both positions and the present arrangements are beneficial and in the interests of our Company and our Shareholders as a whole.

Our Directors will review our corporate governance policies and compliance with the Corporate Governance Code each financial year and comply with the “comply or explain” principle in our corporate governance report which will be included in our annual reports upon Listing.

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SHARE CAPITAL

As of the date of this document, the registered share capital of our Company is RMB337,500,000 divided into 337,500,000 Shares with a nominal value of RMB1.00 each.

Pursuant to the resolutions of extraordinary Shareholders’ meeting dated May 18, 2015, immediately upon the Listing, the Shares with a nominal value of RMB1.00 each in the registered share capital of our Company will be split into four Shares of RMB0.25 each. Accordingly, immediately upon the Listing, assuming the [REDACTED] is not exercised, the share capital of the Company immediately after the [REDACTED] will be as follows:

Number of Shares [REDACTED] [REDACTED] [REDACTED]	Description of Shares Domestic Shares H Shares to be issued under the [REDACTED] Total	Approximate Percentage to Total Share Capital	Approximate Percentage to Total Share Capital
			[REDACTED]% [REDACTED]%
			100%

Assuming the [REDACTED] is exercised in full, the share capital of the Company immediately after the [REDACTED] will be as follows:

Number of Shares [REDACTED] [REDACTED] [REDACTED] [REDACTED]	Description of Shares Domestic Shares H Shares to be issued under the [REDACTED] H Shares to be issued upon full exercise of the [REDACTED] Total	Approximate Percentage to Total Share Capital	Approximate Percentage to Total Share Capital
			[REDACTED]% [REDACTED]% [REDACTED]%
			100%

PUBLIC FLOAT REQUIREMENTS

Rules 8.08(1)(a) and (b) of the Listing Rules require there to be an open market in the securities for which listing is sought and for a sufficient public float of an issuer’s listed securities to be maintained. This normally means that (i) at least 25% of the issuer’s total issued share capital must at all times be held by the public; and (ii) where an issuer has one class of securities or more apart from the class of securities for which listing is sought, the total securities of the issuer held by the public (on all regulated market(s) including the Stock Exchange) at the time of listing must be at least 25% of the issuer’s total issued share capital. However, the class of securities for which listing is sought must not be less than 15% of the issuer’s total issued share capital and must have an expected market capitalization at the time of listing of not less than HK$50 million.

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SHARE CAPITAL

On the basis of the issue of [REDACTED] H Shares under the [REDACTED] (before exercise of the [REDACTED]), our Company will meet the public float requirement under the Listing Rules after the completion of the [REDACTED] (without taking into account any exercise of the [REDACTED]).

Our Shares

Our Domestic Shares and H Shares are all ordinary Shares in the share capital of our Company. H Shares may only be subscribed for and traded in Hong Kong dollars. Domestic Shares, on the other hand, may only be subscribed for and traded in Renminbi. Apart from certain qualified domestic institutional investors in the PRC through Shanghai-Hong Kong Stock Connect (滬港通), H Shares generally cannot be subscribed for by or traded between legal or natural persons of the PRC. Domestic Shares, on the other hand, can only be subscribed for by and transferred between legal or natural persons of the PRC, qualified foreign institutional investors or qualified foreign strategic investors. Dividends and other payments payable by our Company to holders of H Shares shall be denominated and declares in Hong Kong dollars and payable in Hong Kong dollars, while dividends and other payments payable by our Company to holders of Domestic Shares shall be denominated and declared in Renminbi and payable in Renminbi.

Ranking

Except as described in this document and in relation to the dispatch of notices and financial reports to our Shareholders, dispute resolution, registration of Shares in different parts of our register of Shareholders, the method of share transfer and the appointment of dividend receiving agents, which are all provided for in the Articles of Association and summarized in Appendix VI to this document, our Domestic Shares and our H Shares will rank pari passu with each other in all respects and, in particular, will rank equally for all dividends or distributions declared, paid or made after the date of this document. However, the transfer of Domestic Shares is subject to such restrictions as PRC law may impose from time to time.

CONVERSION OF OUR DOMESTIC SHARES INTO H SHARES

Conversion of Unlisted Shares

Upon the completion of the [REDACTED], we will have two classes of ordinary Shares, H Shares and Domestic Shares. As at the date of this document, all of our Domestic Shares are unlisted Shares which are not listed or traded on any stock exchange (“Unlisted Shares”). The term “Unlisted Shares” is used to describe whether certain Shares are listed or traded on a stock exchange and is not a specific definition under PRC laws. Given the above, our PRC Legal Advisors have advised us that the use of the term “Unlisted Shares” in the Articles of Association does not contravene, and is not inconsistent with, any PRC laws and regulations (including the Special Regulations and the Mandatory Provisions).

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SHARE CAPITAL

According to the stipulations by the State Council’s securities regulatory authority and the Articles of Association, our Unlisted Shares may be converted into H Shares, and such H Shares may be listed or traded on an overseas stock exchange, provided that prior to the conversion and trading of such shares, any requisite internal approval processes (other than Shareholders’ approval by class) shall have been duly completed and the approval from the relevant PRC regulatory authorities, including the CSRC, shall have been obtained. In addition, such conversion, trading and listing shall in all respects comply with the regulations prescribed by the State Council’s securities regulatory authorities and the regulations, requirements and procedures prescribed by the relevant overseas stock exchange.

Approval of the Stock Exchange is required for the listing of such converted H Shares on the Stock Exchange. Based on the methodology and procedures for the conversion of our Unlisted Shares into H Shares as described in this section, we can apply for the listing of all or any portion of our Unlisted Shares on the Stock Exchange as H Shares in advance of any proposed conversion to ensure that the conversion process can be completed promptly upon notice to the Stock Exchange and delivery of shares for entry on the H Share register. As any listing of additional shares after our initial listing on the Stock Exchange is ordinarily considered by the Stock Exchange to be a purely administrative matter, it does not require prior application for listing at the time of our initial listing in Hong Kong.

No class shareholder voting is required for the listing and trading of the converted H Shares on an overseas stock exchange. Any application for listing of the converted H Shares on the Stock Exchange after our initial listing is subject to prior notification by way of announcement to inform Shareholders and the public of any proposed conversion. Please refer to the paragraph headed “Any possible conversion of our Domestic Shares into H Shares in the future could increase the supply of our H Shares in the market and negatively impact the market price of our H Shares.” in the section headed “Risk Factors — Risk relating to the [REDACTED] and Our H Shares” for risk factors related to the conversion of our Unlisted Shares.

Mechanism and Procedures for Conversion

After all the requisite approvals have been obtained, the following procedures will need to be completed in order to effect the conversion: the relevant Domestic Shares will be withdrawn from the Domestic Share register and we will re-register such Shares on our H Share register maintained in Hong Kong and instruct our H Share Registrar to issue H Share certificates. Registration on our H Share register will be conditional on (a) our H Share Registrar lodging with the Stock Exchange a letter confirming the proper entry of the relevant H Shares on our H Share register and the due dispatch of H Share certificates and (b) the admission of the H Shares to trade on the Stock Exchange complying with the Listing Rules and the General Rules of CCASS and the CCASS Operational Procedures in force from time to time. Until the converted shares are re-registered on our H Share register, such Shares would not be listed as H Shares.

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SHARE CAPITAL

TRANSFER OF SHARES ISSUED PRIOR TO LISTING DATE

The PRC Company Law provides that in relation to the [REDACTED] of a company, the shares issued by a company prior to the [REDACTED] of shares shall not be transferred within a period of one year from the date on which the publicly offered shares are traded on any stock exchange. Accordingly, Shares issued by our Company prior to the Listing Date shall be subject to this statutory restriction and not be transferred within a period of one year from the Listing Date.

REGISTRATION OF SHARES NOT LISTED ON OVERSEAS STOCK EXCHANGE

According to the Notice of Centralized Registration and Deposit of Non-overseas Listed Shares of Companies Listed on an Overseas Stock Exchange 《關於境外上市公司非境外上市股份集中登記( 存管有關事宜的通知》) issued by the CSRC, an overseas listed company is required to register its shares that are not listed on the oversea stock exchange with China Securities Depository and Clearing Corporation Limited within 15 working days upon listing.

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SUBSTANTIAL SHAREHOLDERS

So far as the Directors are aware, each of the following persons will, immediately following completion of the [REDACTED] (without taking into account the exercise of the [REDACTED]), have an interest or short position in Shares or underlying Shares which would be required to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, directly or indirectly, be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company:

Shareholder Mr. Ruan Hongliang (阮洪良)(4) . . . . . Ms. Jiang Jinhua (姜瑾華)(5) . . . . . Ms. Ruan Zeyun (阮澤雲)(6) . . . . . Mr. Zhao Xiaofei (趙曉非) (7) . . . . .	Class Domestic Shares Domestic Shares Domestic Shares Domestic Shares	Nature of interest Beneficial owner and parties acting in concert Beneficial owner and parties acting in concert Beneficial owner and interest of spouse Beneficial owner and interest of spouse	Number of Shares held as of the Latest Practicable Date 190,860,000 190,860,000 88,833,000 88,833,000	Approximate percentage of shareholding in the total share capital of our Company as of the Latest Practicable Date(1) Number of Shares held after the [REDACTED] Approximate percentage of shareholding in the relevant class of Shares after the REDACTED Approximate percentage of shareholding in the total share capital of our Company after the REDACTED 56.55% [REDACTED] [REDACTED]% [REDACTED]% 56.55% [REDACTED] [REDACTED]% [REDACTED]% 26.32% [REDACTED] [REDACTED]% [REDACTED]% 26.32% [REDACTED] [REDACTED]% [REDACTED]%

Note:

(1) The calculation is based on the total number of [REDACTED] Domestic Shares in issue as of the Latest Practicable Date. (2) The calculation is based on the total number of [REDACTED] Domestic Shares in issue immediately after completion of the [REDACTED] (without taking into account the exercise of the [REDACTED]).
(3) The calculation is based on the total number of [REDACTED] Domestic Shares and the total number of [REDACTED] H Shares (i.e. a total of [REDACTED] Shares) in issue immediately after completion of the [REDACTED] (without taking into account the exercise of the [REDACTED]).
(4) Mr. Ruan Hongliang is the spouse of Ms. Jiang Jinhua. Mr. Ruan Hongliang owns [REDACTED] Domestic Shares. In addition, pursuant to a concert party agreement dated June 12, 2015 entered into between Mr. Ruan Hongliang and Ms. Jiang Jinhua, Mr. Ruan Hongliang is deemed to be interested in the [REDACTED] Domestic Shares owned by Ms. Jiang Jinhua under the SFO.

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SUBSTANTIAL SHAREHOLDERS

(5) Ms. Jiang Jinhua is the spouse of Mr. Ruan Hongliang. Ms. Jiang Jinhua owns [REDACTED] Domestic Shares. In addition, pursuant to a concert party agreement dated June 12, 2015 entered into between Mr. Ruan Hongliang and Ms. Jiang Jinhua, Ms. Jiang Jinhua is deemed to be interested in the [REDACTED] Domestic Shares owned by Mr. Ruan Hongliang under the SFO.
(6) Ms. Ruan Zeyun owns [REDACTED] Domestic Shares and is deemed to be interested in the [REDACTED] Domestic Shares owned by Mr. Zhao Xiaofei under the SFO.
(7) Mr. Zhao Xiaofei is the spouse of Ms. Ruan Zeyun. Mr. Zhao Xiaofei directly owns [REDACTED] Domestic Shares and is deemed to be interested in the [REDACTED] Domestic Shares owned by Ms. Ruan Zeyun under the SFO.

Save as disclosed herein, the Directors are not aware of any person who will, immediately following the [REDACTED] (without taking into account the exercise of the [REDACTED]), have an interest or short position in Shares or underlying Shares which would be required to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, directly or indirectly, be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company.

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CORNERSTONE INVESTOR

[REDACTED]

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CORNERSTONE INVESTOR

[REDACTED]

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CORNERSTONE INVESTOR

[REDACTED]

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FINANCIAL INFORMATION

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements as of and for each of the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015 and the accompanying notes included in the accountants’ report set out in Appendix I to this document (the “Accountants’ Report”). The Accountants’ Report has been prepared in accordance with IFRS. Potential investors should read the Accountants’ Report and not rely merely on the information contained in this section. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. These statements are based on assumptions and analysis made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ significantly from those projected in the forward-looking statements include, but not limited to, those discussed elsewhere in this document, particularly in “Risk Factors” and “Forward-looking Statements”.

OVERVIEW

We were the largest PV glass manufacturer globally and in China in terms of sales revenue of PV raw glass and processed PV glass in 2014, according to the Frost & Sullivan Report. Our sales revenue from PV glass in 2014 accounted for approximately 18.9% of the total global sales revenue of PV glass and approximately 26.3% of the total sales revenue of PV glass in China. Our PV glass products are mainly ultra-clear patterned PV glasses, which are primarily used to manufacture c-Si PV cells that can subsequently be assembled to form c-Si PV modules. Our PV glass can also be used as covers for thin film PV cells. We sell our PV glass products primarily to domestic and overseas PV module manufacturers. According to the Forst & Sullivan Report, most of the global top ten PV module manufacturers in 2014 have purchased our PV glass products. While we derive a majority of our revenue from PV glass, we also manufacture and sell float glass, household glass and architectural glass, which, together with PV glass, comprise our four major glass products.

We have experienced rapid growth during the Track Record Period. Our revenue for the years ended December 31, 2012, 2013 and 2014, was RMB1,488.6 million, RMB2,187.3 million and RMB2,833.3 million, respectively, representing a CAGR of 38.0%, and for the five months ended May 31, 2014 and 2015, was RMB1,149.8 million and RMB1,237.4 million, respectively, representing an increase of 7.6%. Our profit after tax for the years ended December 31, 2012, 2013 and 2014, was RMB59.9 million, RMB203.6 million and RMB392.7 million, respectively, representing a CAGR of 156.1%, and for the five months ended May 31, 2014 and 2015, was RMB162.1 million and RMB161.5 million, respectively.

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FINANCIAL INFORMATION

RECENT DEVELOPMENT

From June 1, 2015 and up to the Latest Practicable Date, our business generally remained relatively stable. During the period, in order to increase the market penetration of our architectural glass products, we enhanced our price competitiveness such that average selling price for our architectural glass decreased by approximately 8.9% for the period from June 1, 2015 to the Latest Practicable Date as compared to the first five months ended May 31, 2015, based on our internal records. As a result, our sales of architectural glass increased. Further, during the period, the average selling price of our household glass increased by approximately 7.7% as compared to the average selling price for the five months ended May 31, 2015 and recovered to similar level for the year ended December 31, 2014, while the average selling price for our PV glass and float glass remained relatively stable as compared to the five months ended May 31, 2015, based on our internal records. To the best of our knowledge, there is no change to the overall economic and market condition in China or in the PV glass industry in which we operate that may have a material adverse effect to our business operations and financial position. On the other hand, as of the Latest Practicable Date, we were in the course of upgrading our Low-E processing facilities to improve our Low-E glass processing efficiency, among other upgrades. We expect such processing efficiency to improve from an average of 52 seconds per glass to up to 35 seconds per glass upon completion of the technological upgrade.

In terms of our operations, the global natural gas prices experienced a dramatic decline since the second half of 2014, according to the Frost & Sullivan Report. In China, natural gas price is regulated by the NDRC. According to the Frost & Sullivan Report, the average price of natural gas in China has not been significantly affected by the fluctuations in the global natural gas price. Based on our internal records, we also have not noticed any significant price adjustments for our procurement of natural gas. As a result, the recent global natural gas price fluctuations did not have a material impact on our financial performance.

In August 2015, the PBOC had announced rounds of devaluation of the Renminbi by lowering its daily mid-point from a high of US$1.00 to RMB6.1162 on August 10, 2015 to a low of US$1.00 to RMB6.4010 on August 13, 2015. Renminbi devalued against the US dollars in August 2015 as (i) majority of our raw materials are procured within the PRC and settled in Renminbi; (ii) majority of our expenses for our operations such as selling and administrative expenses are incurred in the PRC and settled in Renminbi; (iii) our expected capital expenditures incurred in the PRC will principally be settled in Renminbi, and (iv) for our planned overseas expansion, we expect to procure the machineries and equipment from the PRC, which will be settled in Renminbi, we have not experienced nor expect any material and adverse effect on our business, operations and financial results due to the devaluation of the Renminbi. Since then, the valuation of RMB had increased and the latest mid-point trading price announced by PBOC on November 6, 2015 was US$1.00 to RMB6.3459.

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FINANCIAL INFORMATION

expect further decrease in our sales of PV glass products to the European Union will have a material and adverse impact on our business operations or financial results. The remaining sales to Europe (4.4% of our total sales based on our internal records) for the five months ended May 31, 2015 primarily comprised of our household glass products.

On September 9, 2015, we obtained additional banking facilities from Bank of China, Jiaxing Branch, one of our principal lenders, of RMB415.0 million. On September 21, 2015, September 22, 2015 and October 26, 2015, we drew down RMB30.0 million, RMB30.0 million and RMB140.0 million, respectively, under this facility to replenish our liquidity and enhance our working capital. The BOC Loan bore an interest rate of the two-year benchmark lending rate issued by the PBOC at the time of respective draw-down. The BOC Loan is repayable according to the following schedule: one-eighth of the BOC Loan is repayable by May 31, 2016, one-fourth is repayable by December 31, 2016, one-fourth is repayable by April 30, 2017 and the remaining three-eighth is repayable by August 31, 2017.

BASIS OF PRESENTATION

The financial information is presented in RMB, which is also the functional currency of our Company and its principal subsidiaries.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our results of operations and financial conditions have been and will continue to be affected by a number of external factors, including the following:

Demand and Supply of PV Glass

We are primarily engaged in the design and development, production and sales of PV glass. Most of our PV glass customers are PV module manufacturers in China and around the world. The global demand for PV glass depends largely on the demand for PV modules and the application of solar energy as an alternative to traditional energy sources, such as coal and petroleum.

During the Track Record Period, we experienced growth in our PV glass business as its segment revenue increased from RMB1,120.5 million in 2012 to RMB2,078.4 million in 2014, representing a CAGR of 36.2%, and from RMB845.0 million for the five months ended May 31, 2014 to RMB937.2 million for the five months ended May 31, 2015, representing an increase of 10.9%. Our gross profit margin for the PV glass business segment also increased from 25.8% in 2012 to 37.0% in 2014. These increases were in line with the increase in demand for PV modules globally during the Track Record Period as the sales volume of our PV glass products grew from approximately 35.4 million sq.m. in 2012 to approximately 51.2 million sq.m. in 2013, and further to approximately 69.5 million sq.m. in 2014, representing a CAGR of 40.1%. However, our gross profit margin for the PV glass segment

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FINANCIAL INFORMATION

decreased from 36.4% for the five months ended May 31, 2014 to 33.1% for the five months ended May 31, 2015. The decrease was mainly because we used a higher proportion of natural gas in our production during the period to replace certain amount of fuel oil when we switched to new fuel oil suppliers in order to secure the supply of higher quality fuel oil, which led to a higher energy cost.

While the sales volume of our PV glass experienced growth during the Track Record Period, the average selling prices decreased from approximately RMB31.69 per sq.m. in 2012 to RMB28.12 per sq.m. in 2013 primarily due to excess supply in the market and increase in sales of PV raw glass during the period, which had a lower average selling price as compared to our PV glass products. The average selling price of our PV glass increased to approximately RMB29.89 per sq.m. in 2014 as the PV glass market gradually recovered in 2013 and the selling prices began to stabilize in the second half of 2013 and 2014. The average selling price of PV glass continued to level off at RMB29.28 per sq. m. for the five months ended May 31, 2015 as compared to an average selling price of RMB30.33 per sq. m. for the five months ended May 31, 2014.

Our Directors believe that our operating results have been and will continue to be affected by various external factors, which include, but not limited to, the environment in which we operate in, government policies affecting the solar energy industry and other alternative energy sectors, and our ability to obtain regulatory approval to expand our production capacity, all of which are beyond our control.

Our Product Mix and Customer Mix

Our results of operations and financial conditions are impacted by our product mix and customer mix. We currently have a diversified product portfolio consisting of PV glass, float glass, household glass and architectural glass products. We commenced production and sales of PV glass, float glass, household glass and architectural glass products in 2006, 2011, 2000 and 2002, respectively. In order to diversify our product mix and create additional revenue stream, we commenced commercial production and sales of our float glass in late 2011. During the Track Record Period, we have adjusted our product mix from time to time in response to the changing market conditions. We will continue to refine our product mix and enhance our risk resisting capability by adjusting the production volume of our different products based on customer demand and prevailing market conditions.

For the years ended December 31, 2012, 2013 and 2014, we experienced significant growth in the segment results of our PV glass and household glass products, while maintaining substantial contribution from our float glass and architectural glass products. For example, the segment results of our PV glass and household glass increased from RMB289.0 million and RMB31.2 million in 2012, respectively, to RMB768.6 million and RMB62.5 million in 2014, respectively, representing a CAGR of 63.1% and 41.5%, respectively. The segment results for our float glass improved from a segment loss of RMB2.5 million in 2012 to a segment profit of RMB110.4 million in 2013 as we increased our production volume and sales of float glass in 2013 to match the increased demand. However, it decreased to RMB69.5 million in 2014 as a result of (i) more float glass we manufactured in-house being used to process household glass and architectural glass; and (ii) excess supply of float glass in the surrounding market due to increased production volume of our competitors. The segment results for our architectural glass increased from RMB3.5 million in 2012 to RMB33.3 million in 2013 and remained stable in 2014 at RMB33.8 million as we were affected by the overall slowdown in the

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FINANCIAL INFORMATION

property development and construction sector in the PRC, resulting in a decrease in the average selling price despite an increase in our sales volume. When the market prices of float glass, household glass and architectural glass experienced a decline for the first five months ended May 31, 2015, we continue to focus on the growth in our PV glass segment, which increased from RMB307.7 million for the five months ended May 31, 2014 to RMB309.8 million.

We believe our past success and future growth depends on our ability to maintain our existing customers and attract new customers. We have established stable relationships with our domestic and international customers. Our relationship with the majority of our top ten customers during the Track Record Period predates the Track Record Period. Our PV glass products are mainly sold to domestic and international PV module manufacturers. We sell float glass mainly to glass processing manufacturers and glass wholesalers, while we sell household glass mainly to multinational furniture retailers and overseas furniture manufacturers, and sell architectual glass mainly to architectural contractors and architectural glass processing companies.

Energy and Raw Material Procurement Cost

A substantial part of our cost of production consists of the cost of raw materials and energy. Our production cost of raw materials increased from RMB493.0 million in 2012 to RMB904.2 million in 2014. Our production cost of raw materials was RMB380.0 million for the five months ended May 31, 2014 and RMB356.0 million for the five months ended May 31, 2015. To produce our PV raw glass and float glass, we require, among others, soda ash and silica sand. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, the cost of soda ash amounted to 27.2%, 29.5%, 30.9%, 32.0% and 30.6% of our total production cost of raw materials, respectively, and the cost of silica sand amounted to 19.3%, 22.3%, 23.7%, 22.5% and 25.9% of our total production cost of raw materials, respectively. The purchase price of soda ash fluctuated between RMB1,196 per ton and RMB1,855 per ton between January 1, 2012 to May 31, 2015 while the purchase price of float silica sand and ultra-clear silica sand fluctuated between approximately RMB141 per ton and RMB200 per ton and between approximately RMB274 per ton and RMB580 per ton, during the same periods, respectively, based on our internal records. These fluctuations in the purchase price of our key raw materials were primarily due to their general fluctuations in the demand and supply in China during these periods and were closely related to glass production, which impacted our raw material costs and profitability during the Track Record Period. The price of silica sand has been rising as limited mineral resources of natural quartzite restricts the expansion of exploitation while the increase in the production of glass boosts the demand. In order to secure a more stable source of silica sand supply for our production of float glass, we entered into a mining rights agreement with Chuzhou City Bureau of Land Resources in April 2011 for the extraction right to the seventh segment of a quartzite mine located at the Lingshan-Mujishan mining zone in Fengyang County, Chuzhou City, Anhui Province, China. We have sold the quartzite ore extracted from the Mine to third parties since 2013. Beginning in January 2015, we used certain amount of the silica sand processed and refined from the quartzite ore extracted from the Mine for the production of our float glass. For details of the Mine, please see “Business — Mining Rights.”

In addition, energy costs, being the costs of fuel and electricity, are another major component in our cost of production. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, the energy costs associated with our production amounted to

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FINANCIAL INFORMATION

RMB514.0 million, RMB538.5 million, RMB696.6 million, RMB288.0 million and RMB307.7 million, respectively, representing 41.9%, 34.5%, 35.1%, 35.4% and 36.9%, respectively, of our total cost of production. We primarily use fuel oil, petroleum coke and natural gas as fuel for the production of our glass products. The purchase prices of fuel oil and petroleum coke are based on the prevailing market price at the time of order while the purchase price of natural gas is adjusted in accordance with the terms set forth in the framework agreement. Any fluctuation in purchase prices of fuel oil, petroleum coke and/or natural gas may materially affect our overall cost of production and our profitability.

Production Capacity and Efficiency

In order to meet customer demand, we must ensure that we have sufficient production capacity, which affects our revenue, production efficiency and our profitability. We have also implemented automated production processes for our PV raw glass and float glass, which improved our production efficiency and lowered our labor costs. We currently have 16 production lines for PV raw glass, 21 dedicated processing lines for PV glass, two production lines for float glass, 12 processing lines for household glass and 12 processing lines for architectural glass. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, the designed annual production capacity for our PV raw glass was approximately 479,040 tons, 570,650 tons, 835,850 tons and 345,790 tons, respectively, and the designed annual processing capacity for our PV glass was approximately 63.7 million sq.m., 78.6 million sq.m., 93.9 million sq.m. and 39.5 million sq.m., respectively. For the years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015, the utilization rate of the production capacity of our PV raw glass was 76.1%, 78.5%, 79.2% and 75.7%, respectively, and the utilization rate of the processing capacity of our PV glass products was 52.6%, 56.4%, 79.3% and 81.3%, respectively. In addition, for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, the designed annual production capacity for our float glass was 234,600 tons, 438,000 tons, 438,000 tons and 181,200 tons, respectively, and the utilization rate of the production capacity was 94.6%, 99.5%, 98.8% and 95.6%, respectively. We intend to upgrade our existing PV glass furnace with 490 tons of daily maximum production capacity by optimizing its production method in order to enable it to burn different types of fuel more efficiently. We believe this will allow us to manufacture sufficient quantities of PV raw glass on a cost-efficient manner and allow us to further lower our emission of pollutants and thus, become more environmental friendly.

With respect to our household glass and architectural glass products, since our customers for these products generally have their specific requirements that involve one or more manufacturing processes, the total amount of work done on each type of the finished products would differ from one customer to another, and may differ from one order to another. Therefore, our Directors consider that the processing capacity and utilization rate for our household glass and architectural glass could not be accurately ascertained or be representative or meaningful. During the Track Record Period, we have experienced a growing demand for our Low-E glass products. Accordingly, we intend to expand the processing capacity by adding a new Low-E and Low-E composite glass processing facility by the end of 2016. In addition, we plan to allocate approximately 17.2% of the net proceeds of the [REDACTED] to build new processing facilities and increase our processing capacity for Low-E glass to meet the increasing customer demand.

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FINANCIAL INFORMATION

If any of our production or processing facilities experience significant downtime, or we may not be able to produce sufficient products to meet the orders of our customers, or we may not be able to produce our products on a cost-efficient manner, our business, financial condition and results of operations may be materially and adversely affected. See “Risk Factors — Risks relating to Our Business and Our Industry — Our future plans in the PRC are subject to risks and uncertainties.”

Taxation

We are subject to enterprise income tax in China. During the Track Record Period, our subsidiary, Zhejiang Jiafu, was approved as high-technology enterprise and was entitled to the PRC enterprise income tax at the rate of 15%. The approval for Zhejiang Jiafu is valid from 2013 to 2015. The effective tax rate for our Group for the years ended December 31, 2012, 2013, 2014 and for the five months ended May 31, 2015 was 5.6%, 22.9%, 19.3% and 17.4%, respectively. In addition, in January 2015, according to the Notice of Ministry of Finance and State Administration of Taxation on Issues Concerning Preferential Policies on Enterprise Income Tax for Public Infrastructure Projects and Projects of Environmental Protection, Energy Saving and Water Conservation, Flat New Energy, one of our wholly-owned subsidiaries that mainly engages in the construction, operation and maintenance of distributed PV systems, received preferential tax treatment by the relevant PRC authorities and will be exempt from enterprise income tax for the first three financial years from 2014 to 2016 and subject to 50% reduction for the subsequent three financial years from 2017 to 2019. As advised by our PRC Legal Advisors, the tax preferential treatments that have been granted to our subsidiaries are in compliance with the relevant PRC law and currently effective. Further information is set forth under “Financial Information — Principal Income Statement Components — Income Tax Expenses” and “Risk Factors — Risks relating to Conducting Operations in the PRC — Any change in our tax treatment, including an unfavorable change in preferential enterprise tax rates in the PRC, may have a negative impact on our operating results.”

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

We have identified certain accounting policies that are significant to the preparation of our consolidated financial statements. We have also made certain accounting judgments and assumptions in the process of applying our accounting policies. When reviewing our consolidated financial statements, you should consider (i) our selection of critical accounting policies; (ii) the judgment and assumptions affecting the application of such policies; and (iii) the sensitivity of reported results to changes in conditions and assumptions. We have not changed our assumptions during the Track Record Period and have not noticed any material errors regarding our assumptions. Under the circumstances, we do not expect that our assumptions are likely to change significantly in the future. We set forth below those accounting policies which we believe are of significant importance to us or involve the most critical accounting judgment and estimates used in the preparation of our financial statements. Our significant accounting policies, judgment and estimates, which are important for an understanding of our financial condition and results of operations, are more detailed set forth in Note 3 and Note 4 in Section F of the Accountants’ Report in Appendix I to this document.

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Significant Accounting Policies

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue from the sale of goods is recognized when the goods are delivered and the titles have been passed, at which time all of the following conditions are satisfied: (i) we have transferred to the buyer the significant risks and rewards of ownership of the goods; (ii) we retain neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods we sold; (iii) the amount of revenue can be measured reliably; (iv) it is probable that the economic benefits associated with the transaction will flow to us; and (v) the costs incurred or to be incurred in respect of the transaction can also be measured reliably. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to our Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Dividend income from investments is recognized when the owners’ rights to receive payment have been established. Deposits and installments received from purchasers prior to meeting the revenue recognition criteria are included in the consolidated statements of financial position under current liabilities.

Property, Plant and Equipment

Property, plant and equipment, which include buildings held for use in the production or supply of goods or services, or for administrative purposes (other than construction in progress), are stated at cost less subsequent accumulated depreciation and accumulated impairment losses, if any.

Depreciation is recognized so as to write off the cost of assets (other than construction in progress) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Properties, plant and equipment in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Costs include professional fees and, for qualifying assets, borrowing costs capitalized in accordance with our accounting policy. Such properties, plant and equipment are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

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FINANCIAL INFORMATION

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of such asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

Intangible Assets

Intangible Assets Acquired Separately

Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated amortization and any accumulated impairment losses. Amortization is recognized on a straight-line basis or on units of production basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Derecognition of Intangible Assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

Impairment on Tangible and Intangible Assets and Investments in Subsidiaries

At the end of each reporting period, we review the carrying amounts of its tangible and intangible assets as well as investment in subsidiaries to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, we estimate the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that they may be impaired.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.

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FINANCIAL INFORMATION

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or a cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Research and Development Expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

the technical feasibility of completing the intangible asset so that it will be available use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during development.

The amount initially recognized for internally-generated intangible asset is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is charged to profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible asset is measured at cost less accumulated amortization and accumulated impairment losses (see the accounting policy in respect of impairment losses on non-current assets above), if any.

Inventories

Inventories are stated at the lower of cost and net realizable value. Costs of inventories are determined on a weighted average method. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

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Government Grants

Government grants are not recognized until there is reasonable assurance that we will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which we recognize as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that we should purchase, construct or otherwise acquire non-current assets are recognized as deferred income in the consolidated statements of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to our Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

Financial Instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax calculated under IFRSs because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. Our current tax is calculated using tax rates that have been enacted or substantively enacted by the end of each reporting period.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary

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FINANCIAL INFORMATION

difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where we are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which we expect, at the end of each reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Key Sources of Estimation Uncertainty

Useful Lives of Property, Plant and Equipment

We estimate the useful lives and related depreciation charges for its items of property, plant and equipment. This estimate is based on the management’s experience of the actual useful lives of items of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and actions of its competitors. Our management will increase the depreciation charge where useful lives are less than previously estimated.

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Impairment of Property, Plant and Equipment

We regularly review whether there are any indications of impairment and recognize an impairment loss if the carrying amount of an asset is lower than its recoverable amount. We also test for impairment for property, plant and equipment whenever there is an indication that the asset may be impaired. The recoverable amounts have been determined based on the higher of the fair value less costs of disposal and value in use calculations. These calculations require the use of estimates, such as discount rates, future profitability and growth rates.

Recognition of Deferred Tax Assets

We recognize deferred tax asset for all deductible temporary differences to the extent that it is probable that taxable profit would be available against which the deductible temporary difference can be utilized. In cases where the actual future profits generated are less than expected, a material reversal of deferred tax assets may arise, which would be recognized in the profit or loss of the period in which such reverse takes place.

Impairment of Trade and Bills Receivables

When there is objective evidence of impairment loss, we take into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). Where the actual future cash flows are less than expected, a material impairment loss may arise.

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FINANCIAL INFORMATION

RESULTS OF OPERATIONS

The following table sets forth selected items of our consolidated statements of profit or loss and other comprehensive income for the periods indicated:

Revenue . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . Gross profit . . . . . . . . . . . . Other income . . . . . . . . . . . Other gains and losses . . . . Selling and marketing expenses . . . . . . . . . . . . . Administration expenses . . . Research and development expenditure . . . . . . . . . . . Finance costs . . . . . . . . . . . Profit before tax . . . . . . . . Income tax expenses . . . . . . Profit and total comprehensive income for the year/period . . . . .	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,488,557 2,187,283 2,833,306 (1,167,434) (1,592,422) (1,904,972) 321,123 594,861 928,334 20,339 15,256 20,479 (27,963) (11,134) (38,522) (57,921) (102,246) (108,845) (75,320) (93,769) (105,458) (59,894) (66,582) (129,333) (56,958) (72,343) (80,251) 63,406 264,043 486,404 (3,523) (60,428) (93,737) 59,883 203,615 392,667	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,488,557 2,187,283 2,833,306 (1,167,434) (1,592,422) (1,904,972) 321,123 594,861 928,334 20,339 15,256 20,479 (27,963) (11,134) (38,522) (57,921) (102,246) (108,845) (75,320) (93,769) (105,458) (59,894) (66,582) (129,333) (56,958) (72,343) (80,251) 63,406 264,043 486,404 (3,523) (60,428) (93,737) 59,883 203,615 392,667	For the five months ended May 31,	For the five months ended May 31,	For the five months ended May 31,
	2012 RMB’000 1,488,557 (1,167,434) 321,123 20,339 (27,963) (57,921) (75,320) (59,894) (56,958) 63,406 (3,523) 59,883	2013 RMB’000 2,187,283 (1,592,422) 594,861 15,256 (11,134) (102,246) (93,769) (66,582) (72,343) 264,043 (60,428) 203,615	2014 RMB’000 (unaudited) 1,149,794 (770,543) 379,251 6,495 (22,360) (45,312) (43,472) (37,085) (35,856) 201,661 (39,583) 162,078		2015
					RMB’000 1,237,432 (888,314) 349,118 14,282 (4,569) (46,588) (43,849) (44,377) (28,566) 195,451 (33,912) 161,539

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FINANCIAL INFORMATION

PRINCIPAL INCOME STATEMENT COMPONENTS

Revenue

Our revenue is generated primarily from the sales of (i) PV glass, (ii) float glass, (iii) household glass and (iv) architectural glass. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our total revenue was RMB1,488.6 million, RMB2,187.3 million, RMB2,833.3 million, RMB1,149.8 million and RMB1,237.4 million, respectively. The revenue we generated from the sales of our products was mainly a function of sales volume and selling price.

Segment Revenue

We derive revenue primarily from the sales of our PV glass. We also generate some of our revenue by selling our float glass, household glass and architectural glass products. The table below sets forth our segment revenue for the years or periods indicated:

			For the year ended	For the year ended	December 31,	December 31,		For the five months ended May	For the five months ended May	For the five months ended May	31,
		2012		2013		2014		2014		2015
		RMB’000	%	RMB’000	%	RMB’000	%	RMB’000	%	RMB’000	%
								(unaudited)
Sales of
PV glass	. . . . .	1,120,450	75.3	1,438,413	65.8	2,078,373	73.3	845,016	73.5	937,227	75.7
Float glass	. . . .	170,616	11.5	425,298	19.4	353,846	12.5	159,089	13.8	126,978	10.3
Household	glass .	182,218	12.2	222,578	10.2	250,875	8.9	105,499	9.2	96,579	7.8
Architectural glass.		15,273	1.0	100,770	4.6	139,197	4.9	39,868	3.5	57,147	4.6
Others(1)	. . . . .	—	—	224	—	11,015	0.4	322	—	19,501	1.6
Total . . . .	. . . . .	1,488,557	100.0	2,187,283	100.0	2,833,306	100.0	1,149,794	100.0	1,237,432	100.0

Note:

(1) Others mainly include the quartzite ore extracted from the Mine, which was sold to third parties in 2013, 2014 and 2015.

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FINANCIAL INFORMATION

The following table sets forth the number of units sold and the average selling price of our various glass products during the years or periods indicated:

For the	year ended December 31, 2013 2014 Units(1) Average selling price Units(1) Average selling price ’000 RMB ’000 RMB 51,160 28.12 69,535 29.89 341 1,247.23 312 1,135.39 5,941 37.47 6,719 37.34 1,738 57.98 2,692 51.71	year ended December 31, 2013 2014 Units(1) Average selling price Units(1) Average selling price ’000 RMB ’000 RMB 51,160 28.12 69,535 29.89 341 1,247.23 312 1,135.39 5,941 37.47 6,719 37.34 1,738 57.98 2,692 51.71	For the five months ended May 31,	For the five months ended May 31,	For the five months ended May 31,
2012 Units(1) Average selling price ’000 RMB 35,356 31.69 160 1,066.94 5,010 36.37 225 67.89	2013 Units(1) Average selling price ’000 RMB 51,160 28.12 341 1,247.23 5,941 37.47 1,738 57.98		2014 Units(1) Average selling price ’000 RMB 27,866 30.33 130 1,221.97 2,766 38.14 849 46.94	2015
Units(1) ’000 35,356 160 5,010 225	Units(1) ’000 51,160 341 5,941 1,738	Units(1) ’000 69,535 312 6,719 2,692	Units(1) ’000 27,866 130 2,766 849	Units(1) ’000 32,006 122 2,758 1,017	Average selling price
					RMB 29.28 1,042.21 35.02 56.21

Note:

(1) The units for float glass are in tons while the units for PV glass, household glass and architectural glass are in sq. m. All information relating to the number of units sold and average selling prices was unaudited and based on our internal records. Accordingly, the data and information derived from those figures in the table above and disclosed elsewhere in this document were based on our internal records.

PV Glass

PV glass is one of our principal glass products, and is sold primarily to renowned PV module manufacturers in China and abroad. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, the sales of our PV glass generated segment revenue of RMB1,120.5 million, RMB1,438.4 million, RMB2,078.4 million, RMB845.0 million and RMB937.2 million, respectively. The average selling price for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015 was RMB31.69 per sq.m., RMB28.12 per sq.m., RMB29.89 per sq.m., RMB30.33 per sq.m. and RMB29.28 per sq.m., respectively. The decrease of average selling price from 2012 to 2013 was primarily due to an excess capacity of the PV industry in 2012, which caused a dramatic decrease in the price of PV modules and thus, the price of PV glass in the second half of 2012. The price of PV glass started to stabilize during the second half of 2013 primarily due to the gradual recovery of the PV industry. The average selling price of our PV glass decreased from RMB30.33 per sq.m. for the five months ended May 31, 2014 to RMB29.28 per sq.m. for the five months ended May 31, 2015 as the demand from Europe decreased, primarily due to (i) certain of our customers ceased to manufacture PV modules, and (ii) the Euros weakened and our European customers placed less orders with us. As we continued to increase our market share, the sales volume and revenue generated from the sales of the PV glass increased steadily during the Track Record Period. We mainly sold PV glass during the Track Record Period while we occasionally sold PV raw glass. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, based on our internal records, we sold approximately 1.3 million sq.m., 5.9 million sq.m., 1.1 million sq.m., 0.7 million sq.m. and 0.5 million sq.m. of PV raw glass to third parties, respectively, generating revenue of approximately RMB17.3 million, RMB104.1

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FINANCIAL INFORMATION

million, RMB24.1 million, RMB10.7 million and RMB10.4 million, respectively. The sales volume of, and revenue generated from the sales of, PV raw glass were substantially higher in 2013 compared to 2012 and 2014 mainly because in 2013, based on requests from one of our PV glass customers, we sold approximately 5.3 million sq.m. of PV raw glass to its PV glass processing supplier during the period when our PV glass was undergoing quality standard testing by such customer. We generated revenue of approximately RMB94.7 million in 2013 based on this arrangement based on our internal record.

The selling price of our PV glass products is determined with reference to the prevailing market conditions. As PV glass products are generally used in the manufacturing of PV modules, the prices and demand for which are subject to a number of factors beyond our control, including, but not limited to, the demand and supply of the PV modules. Therefore, we adopted a flexible pricing policy for our PV glass products, taking into consideration numerous factors, including product specifications from our customers, the size of the orders, our production costs, and the supply and demand of comparable products. Please see “Business — Sales and Marketing — Pricing Policy” for more information.

Float Glass

We use a portion of the float glass we manufacture in-house for our production of household glass and architectural glass products and sell the remainder to third-party glass processing companies and glass wholesalers. The revenue generated from the sales of our float glass for the year ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015 amounted to RMB170.6 million, RMB425.3 million, RMB353.8 million, RMB159.1 million and RMB127.0 million, respectively. The average selling price for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015 was approximately RMB1,066.94 per ton, RMB1,247.23 per ton, RMB1,135.39 per ton, RMB1,221.97 per ton and RMB1,042.21 per ton, respectively. The average selling price of our float glass increased from the year ended December 31, 2012 to the year ended December 31, 2013 primarily due to the increase in demand for float glass from our customers. As a result of improved market conditions, both the sales volume and segment revenue of our float glass increased significantly for the year ended December 31, 2013. The decrease of the average selling price from the year ended December 31, 2013 to the year ended December 31, 2014 and from the five months ended May 31, 2014 to the five months ended May 31, 2015 was mainly because certain of our competitors commenced the operation of several new production lines of float glass, which led to an increase in the float glass supply, and thereby, resulting in a decrease in the market price. For the year ended December 31, 2014 and the five months ended May 31, 2015, we adjusted our product mix to use more float glass we manufactured in-house for the processing of our household glass and architectural glass and therefore, the sales attributable to our float glass decreased. We have internal pricing guidelines in place with respect to the float glass we sell to our customers, which take into consideration factors such as cumulative purchase volume, our production costs and prevailing market prices.

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Household Glass and Architectural Glass

We primarily sell our household glass, which comprises of mirror products, tempered glass for cabinet doors and shelves, and other types of glass for household use, to domestic furniture manufacturers and processing companies, multinational furniture retailers and overseas furniture manufacturers and processing companies. In addition, we sell architectural glass products, which mainly consist of tempered glass, Low-E glass, insulated glass and laminated glass to domestic and overseas architectural contractors, domestic architectural glass processing companies, and domestic construction companies. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, the segment revenue of household glass was RMB182.2 million, RMB222.6 million, RMB250.9 million, RMB105.5 million and RMB96.6 million, respectively, and the segment revenue of architectural glass was RMB15.3 million, RMB100.8 million, RMB139.2 million, RMB39.9 million and RMB57.1 million, respectively. For the years ended December 31, 2012, 2013 and 2014, the average selling price of our household glass product remain relatively stable at RMB36.37 per sq.m., RMB37.47 per sq.m. and RMB37.34 per sq.m. For the five months ended May 31, 2014 and 2015, the average selling price of our household glass products was RMB38.14 per sq.m. and RMB35.02 per sq.m., respectively. Such decline was primarily due to a decrease in the market price of float glass, which led to a decrease in the price of household glass products. In addition, for the years ended December 31, 2012, 2013, and 2014, the average selling price of our architectural glass products was RMB67.89 per sq.m., RMB57.98 per sq.m. and RMB51.71 per sq.m., respectively. The average selling price of architectural glass decreased during the period primarily due to (i) an overall slowdown of the PRC property development and construction industry, which led to a decrease in the demand for architectural glass products in the market; and (ii) the economy of scale of the production of our architectural glass. For the five months ended May 31, 2014 and 2015, the average selling price of our architectural glass products was RMB46.94 per sq.m. and RMB56.21 per sq.m., respectively. Such increase was primarily due to (i) our acceptance of certain Low-E glass orders with high quality requirements, which commanded higher selling price compared to regular Low-E glass products; and (ii) our architectural glass achieving better brand recognition, which resulted in higher selling price. We typically take into account the product specifications from our customers, the size of the purchase orders, our production costs and the supply and demand of comparable products when negotiating the selling prices of our household glass and architectural glass products with our customers.

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Geographical Markets

During the Track Record Period, our products were primarily sold to customers in the PRC, Japan, Singapore, Korea, Taiwan, Germany and the United States. The following table sets forth our revenue by geographical market, based on the location of operations of our customers for the years or periods indicated:

Location	For the	For the	For the	year ended December 31,	year ended December 31,	year ended December 31,	year ended December 31,	year ended December 31,	For the five	months ended May 31,	months ended May 31,	months ended May 31,	months ended May 31,
	2012			2013			2014		2014			2015
RMB’000 PRC . . . . . . . . 800,002 Japan. . . . . . . . 111,341 Other countries and regions in Asia(1) . . . . . 363,601 Europe. . . . . . . 150,537 North America . . 49,806 Other countries. . 13,270 Total. . . . . . . .1,488,557		% 53.8 7.5 24.4 10.1 3.3 0.9 100.0	RMB’000 1,255,370 174,153 461,250 214,466 63,646 18,398 2,187,283		% 57.4 8.0 21.1 9.8 2.9 0.8 100.0	RMB’000 1,533,670 453,109 503,880 250,650 60,555 31,442 2,833,306		% 54.1 16.0 17.8 8.8 2.1 1.2 100.0	RMB’000 (unaudited) 635,393 169,067 196,102 112,188 25,831 11,213 1,149,794	% 55.3 14.7 17.0 9.8 2.2 1.0 100.0			% 54.9 14.8 19.5 7.0 2.9 0.9 100.0

Note:

(1) Include, among others, Korea, Singapore and Taiwan, and exclude the PRC and Japan.

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FINANCIAL INFORMATION

Cost of Sales

Our cost of sales mainly consists of costs of raw materials, energy and labor, as well as depreciation. Our cost of sales is derived from the cost of production, as adjusted by changes in inventories of finished goods and work in progress. The following table sets forth the reconciliation of our cost of production with our cost of sales for the years or periods indicated:

For the year ended December 31, 2012 2013 2014 RMB’000 % RMB’000 % RMB’000 % 134,130 10.9 212,699 13.6 279,367 14.1 95,029 7.7 160,744 10.3 214,269 10.8 166,871 13.6 235,149 15.1 280,379 14.1 96,925 7.9 113,108 7.3 130,204 6.5 492,955 40.1 721,700 46.3 904,219 45.5 363,165 29.6 357,738 22.9 452,836 22.8 150,880 12.3 180,809 11.6 243,783 12.3 514,045 41.9 538,547 34.5 696,619 35.1 83,594 6.8 100,432 6.5 121,221 6.1 108,366 8.8 165,799 10.6 187,672 9.4 29,959 2.4 33,150 2.1 77,450 3.9 1,228,919 100.0 1,559,628 100.0 1,987,181 100.0 (61,485) 32,794 (82,209) 1,167,434 1,592,422 1,904,972	For the year ended December 31, 2012 2013 2014 RMB’000 % RMB’000 % RMB’000 % 134,130 10.9 212,699 13.6 279,367 14.1 95,029 7.7 160,744 10.3 214,269 10.8 166,871 13.6 235,149 15.1 280,379 14.1 96,925 7.9 113,108 7.3 130,204 6.5 492,955 40.1 721,700 46.3 904,219 45.5 363,165 29.6 357,738 22.9 452,836 22.8 150,880 12.3 180,809 11.6 243,783 12.3 514,045 41.9 538,547 34.5 696,619 35.1 83,594 6.8 100,432 6.5 121,221 6.1 108,366 8.8 165,799 10.6 187,672 9.4 29,959 2.4 33,150 2.1 77,450 3.9 1,228,919 100.0 1,559,628 100.0 1,987,181 100.0 (61,485) 32,794 (82,209) 1,167,434 1,592,422 1,904,972	For the year ended December 31, 2012 2013 2014 RMB’000 % RMB’000 % RMB’000 % 134,130 10.9 212,699 13.6 279,367 14.1 95,029 7.7 160,744 10.3 214,269 10.8 166,871 13.6 235,149 15.1 280,379 14.1 96,925 7.9 113,108 7.3 130,204 6.5 492,955 40.1 721,700 46.3 904,219 45.5 363,165 29.6 357,738 22.9 452,836 22.8 150,880 12.3 180,809 11.6 243,783 12.3 514,045 41.9 538,547 34.5 696,619 35.1 83,594 6.8 100,432 6.5 121,221 6.1 108,366 8.8 165,799 10.6 187,672 9.4 29,959 2.4 33,150 2.1 77,450 3.9 1,228,919 100.0 1,559,628 100.0 1,987,181 100.0 (61,485) 32,794 (82,209) 1,167,434 1,592,422 1,904,972	For the five months ended May 31,	For the five months ended May 31,	For the five months ended May 31,
2012 RMB’000 % 134,130 10.9 95,029 7.7 166,871 13.6 96,925 7.9 492,955 40.1 363,165 29.6 150,880 12.3 514,045 41.9 83,594 6.8 108,366 8.8 29,959 2.4 1,228,919 100.0 (61,485) 1,167,434	2013 RMB’000 % 212,699 13.6 160,744 10.3 235,149 15.1 113,108 7.3 721,700 46.3 357,738 22.9 180,809 11.6 538,547 34.5 100,432 6.5 165,799 10.6 33,150 2.1 1,559,628 100.0 32,794 1,592,422		2014 RMB’000 (unaudited) % 121,275 14.9 85,227 10.5 119,221 14.6 53,842 6.6 379,565 46.6 186,234 22.9 101,784 12.5 288,018 35.4 48,354 5.9 78,631 9.6 20,178 2.5 814,746 100.0 (44,203) 770,543	2015
RMB’000 134,130 95,029 166,871 96,925 492,955 363,165 150,880 514,045 83,594 108,366 29,959 1,228,919 (61,485) 1,167,434	RMB’000 212,699 160,744 235,149 113,108 721,700 357,738 180,809 538,547 100,432 165,799 33,150 1,559,628 32,794 1,592,422	RMB’000 279,367 214,269 280,379 130,204 904,219 452,836 243,783 696,619 121,221 187,672 77,450 1,987,181 (82,209) 1,904,972	RMB’000 (unaudited) 121,275 85,227 119,221 53,842 379,565 186,234 101,784 288,018 48,354 78,631 20,178 814,746 (44,203) 770,543	RMB’000 108,790 92,055 102,080 53,041 355,966 201,710 106,035 307,745 54,642 80,966 33,246 832,565 55,749 888,314	% 13.1 11.1 12.2 6.4
					42.8
					24.2 12.7
					36.9
					6.6 9.7 4.0
					100.0

Notes:

(1) Include limestone, dolomite, pyroantimonate and sodium sulfate.
(2) Includes fuel oil, petroleum coke and natural gas.
(3) Mainly include equipment maintenance cost, consumption of materials, water, mining costs and other manufacturing costs.
(4) Changes of inventories means finished goods and work in progress as of the beginning of the year/period less finished goods and work in progress as of the end of the year/period.

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FINANCIAL INFORMATION

Our cost of production primarily consists of costs of raw materials and costs of energy. It also includes labor costs, depreciation and others.

Raw Materials

Our raw material costs include the cost of soda ash, silica sand, auxiliary materials, such as packing materials and coating liquid, and other raw materials, such as dolomite, limestone, pyroantimonate and sodium sulfate. The production cost of raw materials increased from RMB493.0 million for the year ended December 31, 2012 to RMB904.2 million for the year ended December 31, 2014, primarily as a result of the increase in the production volume of our certain glass products, which led to a larger consumption of the raw materials. It decreased from RMB380.0 million for the five months ended May 31, 2014 to RMB356.0 million for the five months ended May 31, 2015, primarily due to a decrease in the price of soda ash for the first five months of 2015 compared to the same period in 2014. Based on our internal records, for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, the average purchase price of float silica sand was RMB190.91 per ton, RMB183.98 per ton, RMB187.76 per ton, RMB184.00 per ton and RMB195.27 per ton, respectively, while the average purchase price of ultra-clear silica sand was RMB460.29 per ton, RMB458.37 per ton, RMB487.83 per ton, RMB477.17 per ton and RMB496.16 per ton, respectively. The fluctuation in the average purchase price of float silica sand and ultra-clear silica sand during the Track Record Period was mainly due to changing supply and demand dynamics in the market.

Energy

The energy costs associated with our production primarily consist of the costs of fuel and electricity. During the Track Record Period, we used fuel oil, petroleum coke and natural gas as our primary types of fuel for the manufacturing of our glass products. We use these three main types of fuel interchangeably in connection with our production, and we consider the prevailing market price of each type of fuel when placing purchase orders to minimize our energy cost. The fuel cost associated with our production decreased slightly from RMB363.2 million for the year ended December 31, 2012 to RMB357.7 million for the year ended December 31, 2013, but increased by 26.6% to RMB452.8 million for the year ended December 31, 2014, primarily due to the increase in our production volume of our various glass products. For the five months ended May 31, 2015, the fuel cost associated with our production increased to RMB201.7 million from RMB186.2 million for the five months ended May 31, 2014 as we used a higher proportion of natural gas in connection with our production as a result of (i) stronger focus on environmentally friendly production process, and (ii) our continuous efforts in increasing production efficiency, where we switched to new fuel oil suppliers in order to secure the supply of higher quality fuel oil. During the Track Record Period, we engaged one natural gas supplier and a number of fuel oil suppliers, through framework agreements. See “Business — Suppliers and Raw Materials Procurement — Energy” for more information on the terms of the supply contracts for each of our primary energy sources.

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FINANCIAL INFORMATION

For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, the cost of electricity associated with our production was RMB150.9 million, RMB180.8 million, RMB243.8 million, RMB101.8 million and RMB106.0 million, respectively. As an effort to lower production costs, we have installed residual heat power generation facilities in 2012 to generate electricity for part of our electricity needs. In addition, we installed our first distributed PV systems with a total capacity of 10.3MW in June 2014 at our Jiaxing production facilities to gain operating experience in connection with our business strategy to expand our distributed PV systems. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, our power generation facilities supplied in the aggregate approximately 7.4%, 16.2%, 19.7% and 13.7% of our overall electricity consumption, based on our internal records. Our distributed PV systems supplied 0.8% and 1.8% of our overall electricity consumption for the year ended December 31, 2014 and the five months ended May 31, 2015, respectively, based on our internal records. As we increased our production volume, the overall cost of electricity associated with our production continued to rise during the Track Record Period as we consumed more electricity.

Labor

Labor costs primarily consist of salaries and benefits of employees in our production. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our labor cost associated with our production was RMB83.6 million, RMB100.4 million, RMB121.2 million, RMB48.4 million and RMB54.6 million, respectively, primarily due to an increase of base salary of our employees and an increase of piece rate labor cost we incurred as a result of an increase in our production output.

Depreciation

Depreciation represents the depreciation of our production facilities and other fixed assets used in our manufacturing process. The depreciation associated with our production increased from RMB108.4 million for the year ended December 31, 2012 to RMB187.7 million for the year ended December 31, 2014 and from RMB78.6 million for the five months ended May 31, 2014 to RMB81.0 million for the five months ended May 31, 2015, primarily due to our expanding capital expenditure on the production facilities in order to meet the increasing demand for our glass products and higher degree of automation in our production process.

Others

Others mainly include equipment maintenance cost, consumption of materials, water and other manufacturing costs. It increased from RMB30.0 million for the year ended December 31, 2012 to RMB33.2 million for the year ended December 31, 2013, and further to RMB77.5 million for the year ended December 31, 2014, and from RMB20.2 million for the five months ended May 31, 2014 to RMB33.2 million for the five months ended May 31, 2015, primarily due to increased production and sales of our various glass products, which resulted in increased consumption.

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FINANCIAL INFORMATION

Cost of Sales by Segment

The following table sets forth a breakdown of our cost of sales by segment for the years or periods indicated:

PV glass . . . . . . . Float glass . . . . . . Household glass . . . Architectural glass . . Others(1) . . . . . . . Total cost of sales . .	For the year ended December 31, 2012 2013 2014 RMB’000 % RMB’000 % RMB’000 % 831,473 71.2 1,041,610 65.4 1,309,772 68.8 173,152 14.8 314,927 19.8 284,371 14.9 151,006 13.0 168,167 10.6 188,344 9.9 11,803 1.0 67,425 4.2 105,435 5.5 — — 293 — 17,050 0.9 1,167,434 100.0 1,592,422 100.0 1,904,972 100.0	For the year ended December 31, 2012 2013 2014 RMB’000 % RMB’000 % RMB’000 % 831,473 71.2 1,041,610 65.4 1,309,772 68.8 173,152 14.8 314,927 19.8 284,371 14.9 151,006 13.0 168,167 10.6 188,344 9.9 11,803 1.0 67,425 4.2 105,435 5.5 — — 293 — 17,050 0.9 1,167,434 100.0 1,592,422 100.0 1,904,972 100.0	For the five months ended May 31,	For the five months ended May 31,
	2012 RMB’000 % 831,473 71.2 173,152 14.8 151,006 13.0 11,803 1.0 — — 1,167,434 100.0	2013 RMB’000 % 1,041,610 65.4 314,927 19.8 168,167 10.6 67,425 4.2 293 — 1,592,422 100.0	2014 RMB ‘000 (unaudited) % 537,322 69.7 122,966 16.0 80,272 10.4 29,801 3.9 182 — 770,543 100.0	2015
				RMB ‘000 % 627,416 70.6 122,371 13.8 76,379 8.6 49,834 5.6 12,314 1.4 888,314 100.0

Note:

(1) Others mainly include quartzite ore extracted from the Mine, which was sold to third parties since 2013.

PV Glass

The segment cost for our PV glass increased by 25.3% from RMB831.5 million for the year ended December 31, 2012 to RMB1,041.6 million for the year ended December 31, 2013 primarily due to an increase of sales volume of our PV glass products as the demand for the installation of PV modules increased globally, especially in Asia, coupled with the increase of production capacity as one of our large PV glass furnaces with a daily maximum production capacity of 600 tons commenced operations in May 2013. It further increased by 25.7% to RMB1,309.8 million for the year ended December 31, 2014 mainly as a result of an increase in sales volume of our PV glass products as the demand for PV modules continued to increase and our production capacity increased as two of our PV glass furnaces each with a daily maximum production capacity of 300 tons that were temporarily shut down in 2012 to undergo technical upgrades resumed operations successively in the fourth quarter of 2013. The segment cost for PV glass increased by 16.8% from RMB537.3 million for the five months ended May 31, 2014 to RMB627.4 million for the five months ended May 31, 2015 primarily due to an increase in sales volume of PV glass during the period and a higher energy cost from the increased use of natural gas in our production.

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FINANCIAL INFORMATION

Float Glass

The segment cost for float glass increased by 81.9% from RMB173.2 million for the year ended December 31, 2012 to RMB314.9 million for the year ended December 31, 2013 primarily due to an increase in the sales volume of our float glass as we ramped up our float glass production by adding our second float glass production line, which commenced operations in December 2012, as well as our increased sales efforts to maintain our growth. However, it decreased by 9.7% to RMB284.4 million for the year ended December 31, 2014 mainly due to a decrease in sales volume of our float glass as the demand for our household glass and architectural glass increased. As a result, we required more float glass for our internal household and architectural glass production use. The segment cost for float glass decreased slightly from RMB123.0 million for the five months ended May 31, 2014 to RMB122.4 million for the five months ended May 31, 2015 primarily due to a decrease in sales of our float glass as we strategically have not adjusted the selling price of our float glass downward as much as the decline in market price of float glass.

Household Glass

With respect to household glass, the segment cost increased by 11.4% from RMB151.0 million for the year ended December 31, 2012 to RMB168.2 million for the year ended December 31, 2013, and further to RMB188.3 million for the year ended December 31, 2014, primarily due to increased sales to new and existing affiliates and furniture manufacturers of a large multinational furniture retailer as we strengthened our business relationship with such furniture retailer based on the excellent and stable quality of our household glass products, which resulted in higher number of purchase orders. The segment cost for household glass decreased by 4.8% from RMB80.3 million for the five months ended May 31, 2014 to RMB76.4 million for the five months ended May 31, 2015 primarily due to a slight decline in sales volume.

Architectural Glass

The segment cost for architectural glass increased substantially from RMB11.8 million for the year ended December 31, 2012 to RMB67.4 million for the year ended December 31, 2013 primarily due to a substantial increase in the sales volume of our architectural glass as we continued to optimize our product mix, including the new offering of Low-E glass products in early 2013. It further increased by 56.4% to RMB105.4 million for the year ended December 31, 2014 mainly due to continued increase in our sales of Low-E glass, better recognition of our brand and our product quality despite a slowdown in the growth of the property development and construction sector in the PRC. The segment cost for architectural glass increased substantially by 67.2% from RMB29.8 million for the five months ended May 31, 2014 to RMB49.8 million for the five months ended May 31, 2015 primarily due to an increase in the sales of architectural glass during the period, a higher cost of float glass production resulting from the increased energy cost and our acceptance of certain Low-E glass orders with high quality requirements.

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FINANCIAL INFORMATION

Gross Profit and Gross Profit Margin

For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our gross profit was RMB321.1 million, RMB594.9 million, RMB928.3 million, RMB379.3 million and RMB349.1 million, respectively, and our gross profit margin was 21.6%, 27.2%, 32.8%, 33.0% and 28.2%, respectively, for the same periods. The table below sets forth our gross profit and gross profit margin by business segment for the years or periods indicated:

For the year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 Gross Profit Margin Gross Profit Margin Gross Profit Margin Gross Profit Margin Gross Profit Margin RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 288,977 25.8 396,803 27.6 768,601 37.0 307,694 36.4 309,811 33.1 (2,536) (1.5) 110,371 26.0 69,475 19.6 36,123 22.7 4,607 3.6 31,212 17.1 54,411 24.4 62,531 24.9 25,227 23.9 20,200 20.9 3,470 22.7 33,345 33.1 33,762 24.3 10,067 25.3 7,313 12.8 — — (69) (30.8) (6,035) (54.8) 140 43.5 7,187 36.9 321,123 21.6 594,861 27.2 928,334 32.8 379,251 33.0 349,118 28.2	For the year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 Gross Profit Margin Gross Profit Margin Gross Profit Margin Gross Profit Margin Gross Profit Margin RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 288,977 25.8 396,803 27.6 768,601 37.0 307,694 36.4 309,811 33.1 (2,536) (1.5) 110,371 26.0 69,475 19.6 36,123 22.7 4,607 3.6 31,212 17.1 54,411 24.4 62,531 24.9 25,227 23.9 20,200 20.9 3,470 22.7 33,345 33.1 33,762 24.3 10,067 25.3 7,313 12.8 — — (69) (30.8) (6,035) (54.8) 140 43.5 7,187 36.9 321,123 21.6 594,861 27.2 928,334 32.8 379,251 33.0 349,118 28.2	For the year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 Gross Profit Margin Gross Profit Margin Gross Profit Margin Gross Profit Margin Gross Profit Margin RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 288,977 25.8 396,803 27.6 768,601 37.0 307,694 36.4 309,811 33.1 (2,536) (1.5) 110,371 26.0 69,475 19.6 36,123 22.7 4,607 3.6 31,212 17.1 54,411 24.4 62,531 24.9 25,227 23.9 20,200 20.9 3,470 22.7 33,345 33.1 33,762 24.3 10,067 25.3 7,313 12.8 — — (69) (30.8) (6,035) (54.8) 140 43.5 7,187 36.9 321,123 21.6 594,861 27.2 928,334 32.8 379,251 33.0 349,118 28.2	For the five months ended May 31,	For the five months ended May 31,
2012 Gross Profit Margin RMB’000 % 288,977 25.8 (2,536) (1.5) 31,212 17.1 3,470 22.7 — — 321,123 21.6	2013 Gross Profit Margin RMB’000 % 396,803 27.6 110,371 26.0 54,411 24.4 33,345 33.1 (69) (30.8) 594,861 27.2		2015
Gross Profit RMB’000 288,977 (2,536) 31,212 3,470 — 321,123	Gross Profit RMB’000 396,803 110,371 54,411 33,345 (69) 594,861	Gross Profit RMB’000 768,601 69,475 62,531 33,762 (6,035) 928,334	Gross Profit RMB’000 309,811 4,607 20,200 7,313 7,187 349,118	Margin
				% 33.1 3.6 20.9 12.8 36.9 28.2

Note:

(1) Others mainly include quartzite ore extracted from the Mine, which was sold to third parties since 2013.

The increase in our overall gross profit margin during the Track Record Period was mainly attributable to an increase of our production efficiency and our improved cost control. The gross profit margin for our PV glass increased from 25.8% for the year ended December 31, 2012 to 27.6% for the year ended December 31, 2013 mainly due to the decrease in the cost of energy as a proportion of our production as a result of better cost control, which led to a decrease in the cost of sales for PV glass as a proportion of our revenue. It further increased to 37.0% for the year ended December 31, 2014 mainly due to an increase of the average selling price from RMB28.12 per sq.m. in 2013 to RMB29.89 per sq.m. in 2014. Furthermore, the gross profit margin for our PV glass decreased from 36.4% for the five months ended May 31, 2014 to 33.1% for the five months ended May 31, 2015 primarily due to a decrease in our average selling price as a result of decreased demand from our European customers and higher energy cost associated with our production.

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FINANCIAL INFORMATION

In addition, with respect to float glass, we incurred a negative gross profit margin of 1.5% in 2012 primarily because (i) the quality of finished products was not stable in the first half of 2012 as we only commenced production of float glass in late 2011 and were still incurring substantial cost of installation, equipment testing and adjustment in the first half of 2012; and (ii) the market price of float glass was lower in the first half of 2012 and began to rise in the second half of 2012. It increased to 26.0% in 2013 mainly as (i) the average selling price of float glass increased in 2013; and (ii) we continued to improve the stability of our first and second float glass production lines, which were in their third and second year of operations, respectively. The gross profit margin of float glass decreased to 19.6% for the year ended December 31, 2014 primarily as a result of a decrease in and an adjustment of the average selling price of float glass in 2014. The gross profit margin of float glass further decreased to 3.6% for the five months ended May 31, 2015 from 22.7% for the five months ended May 31, 2014 primarily due to the deteriorating market conditions, which continued into the first five months of 2015 and led to a lower average selling price for our float glass, and our higher energy cost for the same period.

The gross profit margin of household glass and architectural glass increased from 17.1% and 22.7% in 2012, respectively, to 24.4% and 33.1% in 2013, respectively, primarily due to a decrease in the cost of float glass used in our own production of household glass and architectural glass. The gross profit margin of household glass slightly increased to 24.9% in 2014. The gross profit margin of architectural glass decreased to 24.3% in 2014 mainly because of (i) a decrease in average selling price of our Low-E glass and other architectural glass products; (ii) a higher proportion of the segment revenue was attributable to certain architectural glass products that have lower gross profit margins compared to Low-E glass, which had a gross profit margin of 34.5% in 2014 and was comparable to 2013; and (iii) as Shanghai Flat only commenced production of architectural glass products in 2014, we incurred substantial cost of installation and equipment testing in 2014, which resulted in losses. Furthermore, the gross profit margin of household glass decreased from 23.9% for the five months ended May 31, 2014 to 20.9% for the five months ended May 31, 2015 primarily due to an increase in energy cost. As for our architectural glass, the gross profit margin decreased from 25.3% to 12.8% during the same period primarily due to an increase in energy cost and our acceptance of certain Low-E glass orders with high quality requirements, which led to a higher production cost as compared to regular Low-E glass products.

Sensitivity Analysis

The following tables set forth the sensitivity analysis with respect to the changes in average selling price of our PV glass and the cost of soda ash, silica sand and fuel associated with our production. The sensitivity analysis is hypothetical in nature and we assume that all other variables remained constant. The following sensitivity analysis is for illustrative purposes only, which indicates the likely impact on our profitability during the Track Record Period if the relevant variables increased or decreased to the extent illustrated. We set these hypothetical fluctuations in the sensitivity analysis based on our assessment of the reasonably possible changes in the average selling price of our PV glass, the production cost of certain key raw materials and fuel during the Track Record Period, and we believe that these are sufficiently significant to render the analysis meaningful.

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FINANCIAL INFORMATION

The following sensitivity analysis should not be construed as an indication of our performance during the Track Record Period:

Hypothetical fluctuation of average selling price of PV glass Impact on consolidated statement of profit and loss items for the year ended December 31, 2012 Change in revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the year ended December 31, 2013 Change in revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the year ended December 31, 2014 Change in revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the five months ended May 31, 2015 Change in revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hypothetical fluctuation of cost of soda ash associated with our production Impact on consolidated statement of profit and loss items for the year ended December 31, 2012 Change in production cost of raw materials . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the year ended December 31, 2013 Change in production cost of raw materials . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the year ended December 31, 2014 Change in production cost of raw materials . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the five months ended May 31, 2015 Change in production cost of raw materials . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	-10% (112,045.0) (112,045.0) (102,200.5) (143,841.3) (143,841.3) (115,449.8) (207,837.3) (207,837.3) (165,679.3) (93,722.7) (93,722.7) (74,544.0) -10% (13,413.0) 13,413.0 10,511.9 (21,269.9) 21,269.9 16,519.3 (27,936.7) 27,936.7 21,786.4 (10,879.0) 10,879.0 8,499.8	-5% 5% (RMB’000) (56,022.5) 56,022.5 (56,022.5) 56,022.5 (51,100.2) 45,298.4 (71,920.7) 71,920.7 (71,920.7) 71,920.7 (57,724.9) 57,724.9 (103,918.7) 103,918.7 (103,918.7) 103,918.7 (82,839.6) 82,839.6 (46,861.4) 46,861.4 (46,861.4) 46,861.4 (37,272.0) 37,272.0 -5% 5% (RMB’000) (6,706.5) 6,706.5 6,706.5 (6,706.5) 5,256.0 (6,367.4) (10,634.9) 10,634.9 10,634.9 (10,634.9) 8,259.7 (8,259.7) (13,968.3) 13,968.3 13,968.3 (13,968.3) 10,893.2 (10,893.2) (5,439.5) 5,439.5 5,439.5 (5,439.5) 4,249.9 (4,249.9)	10%
			112,045.0 112,045.0 90,596.8 143,841.3 143,841.3 115,449.8 207,837.3 207,837.3 165,679.3 93,722.7 93,722.7 74,544.0 10%
			13,413.0 (13,413.0) (12,734.7) 21,269.9 (21,269.9) (16,519.3) 27,936.7 (27,936.7) (21,786.4) 10,879.0 (10,879.0) (8,499.8)

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FINANCIAL INFORMATION

Hypothetical fluctuation of cost of silica sand associated with our production Impact on consolidated statement of profit and loss items for the year ended December 31, 2012 Change in production cost of raw materials . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the year ended December 31, 2013 Change in production cost of raw materials . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the year ended December 31, 2014 Change in production cost of raw materials . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the five months ended May 31, 2015 Change in production cost of raw materials . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hypothetical fluctuation of cost of fuel associated with our production Impact on consolidated statement of profit and loss items for the year ended December 31, 2012 Change in production cost of fuel . . . . . . . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the year ended December 31, 2013 Change in production cost of fuel . . . . . . . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the year ended December 31, 2014 Change in production cost of fuel . . . . . . . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact on consolidated statement of profit and loss items for the five months ended May 31, 2015 Change in production cost of fuel . . . . . . . . . . . . . . . . . . . . . . . . Change in gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in profit after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	-10% (9,502.9) 9,502.9 7,611.2 (16,074.4) 16,074.4 12,642.0 (21,426.9) 21,426.9 16,899.6 (9,205.5) 9,205.5 7,260.8 -20% (72,633.1) 72,633.1 58,222.5 (71,547.6) 71,547.6 56,353.3 (90,567.1) 90,567.1 71,206.3 (40,342.0) 40,342.0 31,675.0	-5% 5% (RMB’000) (4,751.4) 4,751.4 4,751.4 (4,751.4) 3,805.6 (4,388.4) (8,037.2) 8,037.2 8,037.2 (8,037.2) 6,321.0 (6,321.0) (10,713.5) 10,713.5 10,713.5 (10,713.5) 8,449.8 (8,449.8) (4,602.8) 4,602.8 4,602.8 (4,602.8) 3,630.4 (3,630.4) -10% 10% (RMB’000) (36,316.5) 36,316.5 36,316.5 (36,316.5) 29,111.2 (33,505.8) (35,773.8) 35,773.8 35,773.8 (35,773.8) 28,176.7 (28,176.7) (45,283.6) 45,283.6 45,283.6 (45,283.6) 35,603.2 (35,603.2) (20,171.0) 20,171.0 20,171.0 (20,171.0) 15,837.5 (15,837.5)	10%
			9,502.9 (9,502.9) (8,776.8) 16,074.4 (16,074.4) (12,642.0) 21,426.9 (21,426.9) (16,899.6) 9,205.5 (9,205.5) (7,260.8) 20%
			72,633.1 (72,633.1) (67,011.6) 71,547.6 (71,547.6) (56,353.3) 90,567.1 (90,567.1) (71,206.3) 40,342.0 (40,342.0) (31,675.0)

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FINANCIAL INFORMATION

Other Income

Other income primarily consists of government grants. Government grants mainly represented (i) incentives provided by local PRC government in connection with our business expansion, technological advancement and product development efforts; and (ii) government subsidies relating to the construction of our furnaces and our PV glass and Low-E glass processing lines, the construction of our distributed PV systems, the technological upgrade of our PV glass plants and related technologies, and amount of power generated from our distributed PV systems. These government grants were either conditional or unconditional, and conditional government grants generally are specific to the projects on a case-by-case basis. During the Track Record Period, conditional government grants included the grants for our PV glass furnaces, our existing distributed PV systems and TCO glass projects. The TCO glass projects included the constructions of our float glass furnaces and TCO glass processing line. We ceased the TCO glass operations in 2012 due to then-prevailing market conditions and a change to our business strategy. As advised by our PRC Legal Advisors, according to a confirmation issued by the competent local government authorities, our business operations activities continually comply with the Interim Measures of Xiuzhou District of Jiaxing City on Administration of Special Funds to Support the Construction of Major Investment Project (嘉興巿秀洲區扶持重大投資項目建設專項資金管理暫行辦法) and satisfy the conditions of the relevant government grants. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our other income was RMB20.3 million, RMB15.3 million, RMB20.5 million, RMB6.5 million and RMB14.3 million, respectively.

Other Gains and Losses

Other gains and losses primarily consist of losses or gains on disposal of property, plant and equipment, impairment of property, plant and equipment, losses on disposal of land use right, net foreign exchange loss, allowance for doubtful debts and gains on disposal of scarp material. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our other losses were RMB28.0 million, RMB11.1 million, RMB38.5 million, RMB22.4 million and RMB4.6 million, respectively.

Selling and Marketing Expenses

Selling and marketing expenses primarily consist of export expenses, domestic transportation and delivery expenses, staff salaries and benefits and sales commissions. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our selling and marketing expenses were RMB57.9 million, RMB102.2 million, RMB108.8 million, RMB45.3 million and RMB46.6 million, respectively.

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FINANCIAL INFORMATION

The following table sets forth a breakdown of our selling and marketing expenses for the years or periods indicated:

Export expenses. . . . Domestic transportation and delivery expenses . Staff salaries and benefits . . . . . . Sales commissions . . Others(1). . . . . . . . Total selling and marketing expenses. . . . . .	For the Year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 26,795 46.3 44,908 43.9 45,849 42.1 20,186 44.5 27,430 58.9 18,772 32.4 38,363 37.6 39,420 36.2 13,578 30.0 8,504 18.3 4,430 7.6 6,038 5.9 6,696 6.2 2,970 6.6 2,905 6.2 4,354 7.5 8,842 8.6 12,091 11.1 6,180 13.6 6,062 13.0 3,570 6.2 4,095 4.0 4,789 4.4 2,398 5.3 1,687 3.6 57,921 100.0 102,246 100.0 108,845 100.0 45,312 100.0 46,588 100.0	For the Year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 26,795 46.3 44,908 43.9 45,849 42.1 20,186 44.5 27,430 58.9 18,772 32.4 38,363 37.6 39,420 36.2 13,578 30.0 8,504 18.3 4,430 7.6 6,038 5.9 6,696 6.2 2,970 6.6 2,905 6.2 4,354 7.5 8,842 8.6 12,091 11.1 6,180 13.6 6,062 13.0 3,570 6.2 4,095 4.0 4,789 4.4 2,398 5.3 1,687 3.6 57,921 100.0 102,246 100.0 108,845 100.0 45,312 100.0 46,588 100.0	For the Year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 26,795 46.3 44,908 43.9 45,849 42.1 20,186 44.5 27,430 58.9 18,772 32.4 38,363 37.6 39,420 36.2 13,578 30.0 8,504 18.3 4,430 7.6 6,038 5.9 6,696 6.2 2,970 6.6 2,905 6.2 4,354 7.5 8,842 8.6 12,091 11.1 6,180 13.6 6,062 13.0 3,570 6.2 4,095 4.0 4,789 4.4 2,398 5.3 1,687 3.6 57,921 100.0 102,246 100.0 108,845 100.0 45,312 100.0 46,588 100.0	For the five months ended May 31,	For the five months ended May 31,	For the five months ended May 31,
	2012 RMB’000 % 26,795 46.3 18,772 32.4 4,430 7.6 4,354 7.5 3,570 6.2 57,921 100.0	2013 RMB’000 % 44,908 43.9 38,363 37.6 6,038 5.9 8,842 8.6 4,095 4.0 102,246 100.0			2015
	RMB’000 26,795 18,772 4,430 4,354 3,570 57,921	RMB’000 44,908 38,363 6,038 8,842 4,095 102,246	RMB’000 45,849 39,420 6,696 12,091 4,789 108,845		RMB’000 27,430 8,504 2,905 6,062 1,687 46,588	% 58.9 18.3 6.2 13.0 3.6 100.0

Note:

(1) Others mainly include, among others, office expenses, travel expenses, entertainment expenses and advertising and promotional expenses.

For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our selling and marketing expenses represented 3.9%, 4.7%, 3.8%, 3.9% and 3.8%, respectively, of our revenue. The change of most of the items under selling and marketing expenses were in line with the changes in our sales volume.

Administration Expenses

Our administration expenses primarily consist of staff salaries and benefits for administrative personnel (including insurance and other benefits), depreciation and amortization, office expenses, entertainment expenses, professional fees, tax expenses, environmental protection expenses and bank charges. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our administration expenses were RMB75.3 million, RMB93.8 million, RMB105.5 million, RMB43.5 million and RMB43.8 million, respectively.

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FINANCIAL INFORMATION

The following table sets forth a breakdown of our administration expenses for the years or periods indicated:

Staff salaries and benefits . . . . . . Depreciation and amortization . . . Land use tax, property levy and business tax . . . . Entertainment expenses . . . . . . Professional fees . . . Environmental protection expenses . . . . . Office expenses . . . Bank charges . . . . . Others(1) . . . . . . . Total administration expenses. . . . . .	For the Year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 30,564 40.6 37,779 40.3 51,057 48.4 23,854 54.9 23,448 53.5 19,865 26.4 20,464 21.8 11,225 10.6 4,953 11.4 4,176 9.5 7,943 10.5 9,028 9.6 8,757 8.3 4,277 9.8 5,744 13.1 3,197 4.2 2,479 2.6 3,911 3.7 1,640 3.8 548 1.2 225 0.2 3,903 4.2 5,771 5.5 349 0.8 557 1.3 2,318 3.1 5,505 5.9 14,738 14.0 3,595 8.3 2,675 6.1 1,782 2.4 2,050 2.2 2,277 2.2 924 2.1 1,323 3.0 1,778 2.4 3,236 3.5 2,081 2.0 834 1.9 1,083 2.5 7,648 10.2 9,325 9.9 5,641 5.3 3,046 7.0 4,295 9.8 75,320 100.0 93,769 100.0 105,458 100.0 43,472 100.0 43,849 100.0	For the Year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 30,564 40.6 37,779 40.3 51,057 48.4 23,854 54.9 23,448 53.5 19,865 26.4 20,464 21.8 11,225 10.6 4,953 11.4 4,176 9.5 7,943 10.5 9,028 9.6 8,757 8.3 4,277 9.8 5,744 13.1 3,197 4.2 2,479 2.6 3,911 3.7 1,640 3.8 548 1.2 225 0.2 3,903 4.2 5,771 5.5 349 0.8 557 1.3 2,318 3.1 5,505 5.9 14,738 14.0 3,595 8.3 2,675 6.1 1,782 2.4 2,050 2.2 2,277 2.2 924 2.1 1,323 3.0 1,778 2.4 3,236 3.5 2,081 2.0 834 1.9 1,083 2.5 7,648 10.2 9,325 9.9 5,641 5.3 3,046 7.0 4,295 9.8 75,320 100.0 93,769 100.0 105,458 100.0 43,472 100.0 43,849 100.0	For the Year ended December 31, For the five months ended May 31, 2012 2013 2014 2014 2015 RMB’000 % RMB’000 % RMB’000 % RMB’000 (unaudited) % RMB’000 % 30,564 40.6 37,779 40.3 51,057 48.4 23,854 54.9 23,448 53.5 19,865 26.4 20,464 21.8 11,225 10.6 4,953 11.4 4,176 9.5 7,943 10.5 9,028 9.6 8,757 8.3 4,277 9.8 5,744 13.1 3,197 4.2 2,479 2.6 3,911 3.7 1,640 3.8 548 1.2 225 0.2 3,903 4.2 5,771 5.5 349 0.8 557 1.3 2,318 3.1 5,505 5.9 14,738 14.0 3,595 8.3 2,675 6.1 1,782 2.4 2,050 2.2 2,277 2.2 924 2.1 1,323 3.0 1,778 2.4 3,236 3.5 2,081 2.0 834 1.9 1,083 2.5 7,648 10.2 9,325 9.9 5,641 5.3 3,046 7.0 4,295 9.8 75,320 100.0 93,769 100.0 105,458 100.0 43,472 100.0 43,849 100.0	For the five months ended May 31,	For the five months ended May 31,	For the five months ended May 31,
	2012 RMB’000 % 30,564 40.6 19,865 26.4 7,943 10.5 3,197 4.2 225 0.2 2,318 3.1 1,782 2.4 1,778 2.4 7,648 10.2 75,320 100.0	2013 RMB’000 % 37,779 40.3 20,464 21.8 9,028 9.6 2,479 2.6 3,903 4.2 5,505 5.9 2,050 2.2 3,236 3.5 9,325 9.9 93,769 100.0			2015
	RMB’000 30,564 19,865 7,943 3,197 225 2,318 1,782 1,778 7,648 75,320	RMB’000 37,779 20,464 9,028 2,479 3,903 5,505 2,050 3,236 9,325 93,769	RMB’000 51,057 11,225 8,757 3,911 5,771 14,738 2,277 2,081 5,641 105,458		RMB’000 23,448 4,176 5,744 548 557 2,675 1,323 1,083 4,295 43,849	% 53.5 9.5 13.1 1.2 1.3 6.1 3.0 2.5 9.8 100.0

Note:

(1) Others mainly include travel expenses, costs relating to repair and maintenance, automobile expenses, rental fees and product certification expenses.

For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, our administration expenses represented 5.1%, 4.3%, 3.7%, 3.8% and 3.5%, respectively, of our revenue. The amount of our administration expenses increased between the year ended December 31, 2012 and the year ended December 31, 2014 primarily due to an increase in the salaries and benefits of our staff as a result of an increase of base salary and performance-based bonus of our employees, and more expenses incurred in environmental protection due to an increase in the per unit tariff charged for our emission of flue gas. Depreciation and amortization expenses decreased significantly for the year ended December 31, 2014 primarily because we temporarily shut down two of our PV glass furnaces for most of 2013 to undergo technical upgrades, and accordingly, the related depreciation and amortization allocated to the administration expenses was higher for the year ended December 31, 2013 compared to the year ended December 31, 2014. Our administration expenses remained relatively stable for the five months ended May 31, 2014 and 2015.

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FINANCIAL INFORMATION

Research and Development Expenditure

Research and development expenditure mainly includes salaries and benefits of our technical staff, costs relating to trial production of our potential new glass products, costs of raw glass and other raw materials incurred in our laboratory testing and expenditures in relatin to the development of new production processes or formulae. For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, we incurred RMB59.9 million, RMB66.6 million, RMB129.3 million, RMB37.1 million and RMB44.4 million, respectively, on research and development. We have not capitalized any of our research and development expenses incurred as intangible assets during the Track Record Period as such expenses have not met all of the criteria under the accounting policies for capitalization. See “Financial Information — Critical Accounting Policies, Estimates and Judgments — Significant Accounting Policies — Research and Development Expenditure” in the document for details of the policy. The following table sets forth an analysis of the principal components of our research and development expenditure for the years or periods indicated:

				For the five months	For the five months
	For the year ended December 31,			ended May 31,
Principal components	2012	2013	2014	2014	2015
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
				(unaudited)
Raw materials and energy . . . . . .	46,719	53,040	96,737	27,956	24,422
Labor costs. . . . . . . . . . . . . . . . .	10,223	11,241	27,132	7,493	12,067
Depreciation and others . . . . . . .	2,952	2,301	5,464	1,636	7,888
Total . . . . . . . . . . . . . . . . . . . . .	59,894	66,582	129,333	37,085	44,377

We believe research and development capabilities are vital for maintaining our market leading position in light of the competitive industry in which we operate. We plan to continue to allocate resources to research and development on new products in amounts we deem necessary and appropriate. However, as of the Latest Practicable Date, we have not set a fixed amount of expenditure level (in terms of percentage of our revenue) dedicated to research and development in order to maintain our flexibility.

Finance Costs

Our finance costs primarily consist of interest expense on bank borrowings. Our finance costs were RMB57.0 million, RMB72.3 million, RMB80.3 million, RMB35.9 million and RMB28.6 million for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015, respectively.

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FINANCIAL INFORMATION

Income Tax Expenses

Income tax expenses consist of current tax and deferred income tax that we incurred. The following table sets forth a breakdown of our taxation expenses for the years or periods indicated:

Current tax: PRC enterprise income tax . . . Under-provision in prior years or period . . . . . . . . . . . . . . Over provision in prior years or period . . . . . . . . . . . . . . . Deferred tax . . . . . . . . . . . . . . . . Total income tax expense for the year or period . . . . . . . .	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 14,924 55,315 104,249 — 436 — (691) — (7) 14,233 55,751 104,242 (10,710) 4,677 (10,505) 3,523 60,428 93,737	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 14,924 55,315 104,249 — 436 — (691) — (7) 14,233 55,751 104,242 (10,710) 4,677 (10,505) 3,523 60,428 93,737	For the five months ended May 31,	For the five months ended May 31,
	2012 RMB’000 14,924 — (691) 14,233 (10,710) 3,523	2013 RMB’000 55,315 436 — 55,751 4,677 60,428	2014 RMB’000 (unaudited) 46,213 — (7) 46,206 (6,623) 39,583	2015
				RMB’000 36,564 — (2,449) 34,115 (203) 33,912

Current tax primarily consists of PRC enterprise income tax payable by our PRC subsidiaries arising from sales in the PRC. Deferred tax comprises mainly the tax (credit)/charge for the current year.

Under Hong Kong law, our subsidiary in Hong Kong is subject to Hong Kong profits tax at the statutory Hong Kong corporate income tax rate of 16.5% of the estimated assessable profit during the Track Record Period.

Under the PRC EIT Law, our subsidiaries in the PRC are subject to PRC enterprise income tax at the statutory tax rate of 25%, except for (i) Zhejiang Jiafu, which was approved as a high-technology enterprise in 2010 with a preferential income tax rate of 15% for an initial period of three years from 2010 to 2012, and an extended period for another three years from 2013 to 2015; and (ii) Flat New Energy, which was approved to be exempt from PRC enterprise income tax for the first three financial years from 2014 to 2016, and will be subject to 50% reduction for the subsequent three financial years from 2017 to 2019.

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FINANCIAL INFORMATION

Our income tax expenses for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015 were RMB3.5 million, RMB60.4 million, RMB93.7 million, RMB39.6 million and RMB33.9 million, respectively. Our effective tax rate for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2014 and 2015 was 5.6%, 22.9%, 19.3%, 19.6% and 17.4%, respectively. Our effective tax rate was only 5.6% in 2012 primarily due to (i) a large proportion of our taxable profits was contributed by Zhejiang Jiafu, one of our subsidiaries, which enjoyed a preferential income tax rate of 15% as high-technology enterprise during the year; and (ii) despite a decrease in our revenue during the year, our research and development expenses did not experience a decrease, which were entitled to additional tax deductions.

We have paid all relevant taxes in accordance with applicable tax regulations and do not have any disputes or unresolved tax issues with the relevant tax authorities.

PERIOD TO PERIOD COMPARISON OF RESULTS OF OPERATIONS

Five months ended May 31, 2015 compared with five months ended May 31, 2014

Revenue

Our revenue increased by RMB87.6 million, or 7.6%, from RMB1,149.8 million for the five months ended May 31, 2014 to RMB1,237.4 million. This increase was primarily due to (i) increased sales of our PV glass, which was RMB845.0 million for the five months ended May 31, 2014 compared to RMB937.2 million for the five months ended May 31, 2015, mainly as a result of increased demand for PV modules in Japan; (ii) increased sales of architectural glass, which was RMB39.9 million for the five months ended May 31, 2014 compared to RMB57.1 million for the five months ended May 31, 2015, primarily due to an increase in the sales of Low-E glass due to the increasing market recognition of our Low-E glass products; and (iii) increased sales of quartzite ore, which was RMB0.3 million for the five months ended May 31, 2014 compared to RMB19.5 million for the five months ended May 31, 2015 primarily because the quality of the quartzite ore extracted from the Mine improved and we were able to sell these quartzite ore at a higher price. These increases were partially offset by decreased sales of float glass and household glass from RMB159.1 million and RMB105.5 million, respectively, for the five months ended May 31, 2014 compared to RMB127.0 million and RMB96.6 million, respectively, for the five months ended May 31, 2015 primarily due to a decline in average selling price of float glass.

Cost of Sales

Our cost of sales increased by RMB117.8 million, or 15.3%, from RMB770.5 million for the five months ended May 31, 2014 to RMB888.3 million for the five months ended May 31, 2015. This increase was primarily due to (i) increased sales volume of PV glass and architectural glass; and (ii) increased energy cost as we used a higher proportion of natural gas in our production during the period to replace certain amount of fue oil when we switched to new fuel oil suppliers in order to secure the supply of higher quality fuel oil.

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Gross Profit and Gross Profit Margin

As a result of the foregoing, our gross profit decreased by RMB30.2 million, or 8.0%, from RMB379.3 million for the five months ended May 31, 2014 to RMB349.1 million for the five months ended May 31, 2015. Our gross profit margin decreased from 33.0% for the five months ended May 31, 2014 to 28.2% for the five months ended May 31, 2015 primarily due to the increase of our energy cost as we used a higher proportion of natural gas in connection with our production.

Other Income

Our other income increased RMB7.8 million, or 120.0%, from RMB6.5 million for the five months ended May 31, 2014, primarily due to an increase in government grants of RMB7.7 million mainly relating to our outstanding performance.

Other Gains and Losses

Our other gains and losses changed, from a loss of RMB22.4 million for the five months ended May 31, 2014 to a loss of RMB4.6 million for the five months ended May 31, 2015. This increase was mainly due to a one-off impairment of property, plant and equipment for our outdated PV glass production facilities that were not suitable for production, which amounted to RMB11.1 million recorded in the five months ended May 31, 2014.

Selling and Marketing Expenses

Our selling and marketing expenses slightly increased by RMB1.3 million, or 2.9%, from RMB45.3 million for the five months ended May 31, 2014 to RMB46.6 million for the five months ended May 31, 2015. The increase was primarily due to increased export expenses from an increase in overseas sales of our glass products.

Administration Expenses

Administration expenses remained relatively stable at RMB43.8 million for the five months ended May 31, 2015 as compared to RMB43.5 million for the five months ended May 31, 2014.

Research and Development Expenditure

Our research and development expenditure increased by RMB7.3 million, or 19.7%, from RMB37.1 million for the five months ended May 31, 2014 to RMB44.4 million for the five months ended May 31, 2015. The increase was primarily a result of different research projects we undertook for the five months ended May 31, 2015, the scope of which required more labor and energy inputs, which led to an increase in our labor and energy costs.

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Finance Costs

Our finance costs decreased by RMB7.3 million, or 20.3%, from RMB35.9 million for the five months ended May 31, 2014 to RMB28.6 million for the five months ended May 31, 2015. The decrease was primarily due to (i) decreased interest rates on our bank borrowings; and (ii) decreased interest expenses incurred as we gradually made repayments to our Financial Investors during the period.

Income Tax Expenses

Our income tax expense decreased by RMB5.7 million, or 14.4%, from RMB39.6 million for the five months ended May 31, 2014 to RMB33.9 million for the five months ended May 31, 2015. The decrease was primarily due to the fact that a larger portion of our profit before tax was contributed by our subsidiary, Zhejiang Jiafu, which, as a high-technology enterprise, was entitled to enjoy a preferential income tax rate of 15% during the period.

Profit for the Period

As a result of the foregoing, our profit for the period remained relatively stable at RMB161.5 million for the period ended May 31, 2015 as compared to RMB162.1 million for the period ended May 31, 2014.

Year ended December 31, 2014 compared with year ended December 31, 2013

Revenue

Our revenue increased by RMB646.0 million, or 29.5%, from RMB2,187.3 million for the year ended December 31, 2013 to RMB2,833.3 million for the year ended December 31, 2014. This increase was primarily due to (i) increased sales of our PV glass, which was RMB1,438.4 million for the year ended December 31, 2013 compared to RMB2,078.4 million for the year ended December 31, 2014, mainly as a result of increased demand for PV modules and our increased production capacity as two of our PV glass furnaces with a daily maximum production capacity of 300 tons each resumed operations in the fourth quarter of 2013 after a temporary shut down in 2012 to undergo technical upgrades; (ii) increased sales of architectural glass, which was RMB100.8 million for the year ended December 31, 2013 compared to RMB139.2 million for the year ended December 31, 2014, primarily as a result of our continued sales efforts to optimize our product mix; and (iii) increased sales of household glass, which was RMB222.6 million for the year ended December 31, 2013 compared to RMB250.9 million for the year ended December 31, 2014, mainly due to our strengthened business relationship with a large multinational furniture retailer and overseas furniture manufacturers based on the excellent and stable quality of our household glass products, which resulted in higher number of purchase orders. These increases were partially offset by a decreased sales of float glass from RMB425.3 million for the year ended December 31, 2013 to RMB353.8 million for the year ended December 31, 2014, primarily because (i) certain of our competitors commenced the operation of several new float glass production lines, which caused an increase in the supply of the float glass in

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the market, and thereby, resulting in a decrease in the market price of float glass and in the sales volume of our float glass; and (ii) the amount of internally-produced float glass we used to process into household glass and architectural glass increased, which resulted in less float glass sold to third parties.

Cost of Sales

Our cost of sales increased by RMB312.6 million, or 19.6%, from RMB1,592.4 million for the year ended December 31, 2013 to RMB1,905.0 million for the year ended December 31, 2014. This increase was primarily due to an increase of sales volume of PV glass, which caused an increase in our consumption of raw materials and fuel in connection with our production.

Gross Profit and Gross Profit Margin

As a result of the foregoing, our gross profit increased by RMB333.4 million, or 56.0%, from RMB594.9 million for the year ended December 31, 2013 to RMB928.3 million for the year ended December 31, 2014. Our gross profit margin increased from 27.2% in 2013 to 32.8% in 2014, primarily due to an increase in the average selling price of our PV glass products from RMB28.12 per sq.m. in 2013 to RMB29.89 per sq.m. in 2014 and an increase in our production efficiency in 2014 as compared to 2013 as a result of our refined cost management.

Other Income

Our other income increased from RMB15.3 million for the year ended December 31, 2013 to RMB20.5 million for the year ended December 31, 2014. This increase was primarily due to an increase in government subsidies of RMB5.3 million in 2014.

Other Gains and Losses

Our other gains and losses increased from a loss of RMB11.1 million for the year ended December 31, 2013 to a loss of RMB38.5 million for the year ended December 31, 2014. This increase was primarily due to (i) a one-off impairment of property, plant and equipment for our outdated PV glass production facilities that were not suitable for production, which amounted to RMB11.6 million; and (ii) an increase in allowance for doubtful debts, net, as a result of a special provision for overdue payment from one of our customers.

Selling and Marketing Expenses

Our selling and marketing expenses increased by RMB6.6 million, or 6.5%, from RMB102.2 million for the year ended December 31, 2013 to RMB108.8 million for the year ended December 31, 2014. This increase was primarily the result of (i) an increase in staff cost and sales commission resulting from the increase in sales volume; and (ii) an increase in transportation and shipping expenses from an increase in the sales of architectural glass products to domestic customers; partially offset by a decrease in container usage fee in 2014 as we purchased a number of containers in bulk in 2013.

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FINANCIAL INFORMATION

Administration Expenses

Administration expenses increased by RMB11.7 million, or 12.5%, from RMB93.8 million for the year ended December 31, 2013 to RMB105.5 million for the year ended December 31, 2014. This increase was primarily due to (i) increased environmental protection expenses as a result of the per unit tariff charged for our emission of flue gas; and (ii) increased staff salaries and benefits as a result of increased contribution of social security funds and housing provident fund; partially offset by a decrease in depreciation and amortization expenses as we resumed operations in 2014 of two of our PV glass furnaces shut down in 2013 upon completion of technical upgrades. See also “Business — Regulatory Compliance and Legal Proceedings” for more information.

Research and Development Expenditure

Our research and development expenditure increased by RMB62.7 million, or 94.1%, from RMB66.6 million for the year ended December 31, 2013 to RMB129.3 million for the year ended December 31, 2014. This increase represented our efforts in research and development initiatives, including launching new projects related to the Low-E glass coating technology, the development of anti-reflective coating for PV glass to increase light transmission rate, as well as the development of new products such as PV glass with under 2.8mm of thickness, which resulted in increased spending on labor costs for our research and development personnel, as well as raw materials and energy used in our research and development projects.

Finance Costs

Our finance costs increased by RMB8.0 million, or 11.1%, from RMB72.3 million for the year ended December 31, 2013 to RMB80.3 million for the year ended December 31, 2014. This increase was primarily because, apart from interest expenses incurred on bank borrowings, interest expenses were also incurred since the date of exit by our Financial Investors until the date we made the repurchase payment. See also “History and Corporate Structure — Our Company — 3. Investments and Exit by our Financial Investors” for more information.

Income Tax Expenses

Our income tax expenses increased by RMB33.3 million, or 55.1%, from RMB60.4 million for the year ended December 31, 2013 to RMB93.7 million for the year ended December 31, 2014. The effective tax rate decreased from 22.9% for the year ended December 31, 2013 to 19.3% for the year ended December 31, 2014 primarily because a larger portion of our profit before tax was contributed by our subsidiary Zhejiang Jiafu, which was entitled as a high-technology enterprise with a lower PRC enterprise income tax rate of 15% during the year.

Profit for the Year

As a result of the foregoing, our profit for the year increased by RMB189.1 million, or 92.9%, from RMB203.6 million for the year ended December 31, 2013 to RMB392.7 million for the year ended December 31, 2014.

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FINANCIAL INFORMATION

Year ended December 31, 2013 compared with year ended December 31, 2012

Revenue

Our revenue increased by RMB698.7 million, or 46.9%, from RMB1,488.6 million for the year ended December 31, 2012 to RMB2,187.3 million for the year ended December 31, 2013. This increase was primarily the result of (i) increased sales of our PV glass, which was RMB1,120.5 million for the year ended December 31, 2012 compared to RMB1,438.4 million for the year ended December 31, 2013, mainly due to increased demand for PV modules in Asia, coupled with the increase of production capacity as one of our PV glass furnaces with daily maximum production capacity of 600 tons commenced operations in May 2013; (ii) increased sales of float glass, which was RMB170.6 million for the year ended December 31, 2012 compared to RMB425.3 million for the year ended December 31, 2013, primarily due to an increase in production capacity as an additional furnace commenced commercial production in the end of 2012 and the average selling price of float glass increased by 16.9% for the year ended December 31, 2013 compared to the year ended December 31, 2012 as a result of improved market conditions; (iii) increased sales of household glass from RMB182.2 million for the year ended December 31, 2012 to RMB222.6 million for the year ended December 31, 2013, mainly due to the sales to new furniture manufacturers of a large multinational furniture retailer as we strengthened our business relationship with such customers based on the excellent and stable quality of our household glass products; and (iv) increased sales of architectural glass from RMB15.3 million for the year ended December 31, 2012 to RMB100.8 million for the year ended December 31, 2013, as we continued to optimize our product mix, including the new offering of Low-E glass products in early 2013.

Cost of Sales

Our cost of sales increased by RMB425.0 million, or 36.4%, from RMB1,167.4 million for the year ended December 31, 2012 to RMB1,592.4 million for the year ended December 31, 2013. This increase was primarily a result of (i) a RMB253.2 million increase in the production cost of raw materials and energy, reflecting our increased sales volume during the year; and (ii) a RMB16.8 million increase in labor costs associated with our production due to an increase in the base salary of our employees and an increase of piece rate salary resulting from the increased manufacturing output.

Gross Profit and Gross Profit Margin

As a result of the foregoing, our gross profit increased by RMB273.8 million, or 85.3%, from RMB321.1 million for the year ended December 31, 2012 to RMB594.9 million for the year ended December 31, 2013. Our gross profit margin increased from 21.6% in 2012 to 27.2% in 2013 primarily due to an increase in our production efficiency in 2013 as compared to 2012.

Other Income

Our other income decreased from RMB20.3 million for the year ended December 31, 2012 to RMB15.3 million for the year ended December 31, 2013. This change was primarily the result of a decrease of government grants.

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Other Gains and Losses

Our other gains and losses changed from a loss of RMB28.0 million for the year ended December 31, 2012 to a loss of RMB11.1 million for the year ended December 31, 2013. This was primarily due to a special provision made in 2012 in relation to account receivables due from one of our PV glass customers, which contributed to a higher allowance for doubtful debts in 2012 as compared to 2013. This was partially offset by an increase in net foreign exchange losses as a result of the appreciation of Renminbi against foreign currencies in 2013 such as the U.S. dollar.

Selling and Marketing Expenses

Our selling and marketing expenses increased by RMB44.3 million, or 76.5%, from RMB57.9 million for the year ended December 31, 2012 to RMB102.2 million for the year ended December 31, 2013. This increase was primarily due to (i) an increase in container usage fees as we purchased a number of domestic land transport containers in bulk in 2013; (ii) an increase in export expenses due to an increase in the sales of our products to overseas customers; and (iii) an increase in sales commissions paid to our sales staff reflecting an increase in the sales of our products.

Administration Expenses

Administration expenses increased by RMB18.5 million, or 24.6%, from RMB75.3 million for the year ended December 31, 2012 to RMB93.8 million for the year ended December 31, 2013. This increase was primarily the result of an increase in staff salaries and benefits as we increased our contribution of social security funds and housing provident funds, as well as the provision of other benefits.

Research and Development Expenditure

Our research and development expenditure increased by RMB6.7 million, or 11.2%, from RMB59.9 million for the year ended December 31, 2012 to RMB66.6 million for the year ended December 31, 2013. This increase was primarily a result of an increase in our investments in research and development relating to our PV glass.

Finance Cost

Our finance costs increased by RMB15.3 million, or 26.8%, from RMB57.0 million for the year ended December 31, 2012 to RMB72.3 million for the year ended December 31, 2013. Interest expenses incurred on bank borrowings attributable to the purchase or construction of furnaces and processing lines in 2012 were capitalized, and we ceased to capitalize such interest expenses when the furnaces and processing lines were put into use in 2013. As a result, although the borrowing cost decreased in 2013, the finance cost increased during the year.

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Income Tax Expense

Our income tax expense increased significantly from RMB3.5 million for the year ended December 31, 2012 to RMB60.4 million for the year ended December 31, 2013, primarily because our profit before tax increased by RMB200.6 million, or 316.4%, from RMB63.4 million for the year ended December 31, 2012 to RMB264.0 million for the year ended December 31, 2013 driven by our increased sales. Effective tax rate increased from 5.6% for the year ended December 31, 2012 to 22.9% for the year ended December 31, 2013 primarily because our Company incurred operating loss in 2012.

Profit for the Year

As a result of the foregoing, our profit for the year increased by RMB143.7 million, or 239.9%, from RMB59.9 million for the year ended December 31, 2012 to RMB203.6 million for the year ended December 31, 2013.

LIQUIDITY AND CAPITAL RESOURCES

Our primary uses of cash are to fund our working capital requirements, our purchase of property, plant and equipment and to repay loans and related interest expenses. To date, we have funded our operations principally with cash generated from our operations and bank borrowings. In the future, we believe that our liquidity requirements will be satisfied with a combination of cash flows generated from our operating activities, bank loans and other borrowings, net proceeds from this [REDACTED] and other funds raised from the capital markets from time to time. Any significant decrease in demand for, or pricing of, our products or a significant decrease in the availability of bank loans may adversely impact our liquidity. As of December 31, 2012, 2013 and 2014 and May 31, 2015, we had bank balances and cash of RMB125.2 million, RMB214.2 million, RMB141.2 million and RMB191.5 million, respectively.

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Cash Flows

The following table sets forth our cash flows for the years ended December 31, 2012, 2013, 2014 and for the five months ended May 31, 2014 and 2015:

Net cash (used in)/from operating activities . . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . . Net cash from/(used in) financing activities . . . . . . . . Net (decrease)/increase in cash and cash equivalents . . . . . . . Cash and cash equivalents at the beginning of year/period . . . . Cash and cash equivalents at the end of year/ period . . . .	For the Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 (9,338) 553,737 605,427 (289,113) (235,970) (197,872) 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	For the five months ended May 31,	For the five months ended May 31,
		2012 RMB’000 (9,338) (289,113) 241,582 (56,869) 182,112 125,243		2013 RMB’000 553,737 (235,970) (228,836) 88,931 125,243 214,174		2014 RMB’000 (unaudited) 127,329 (29,042) 191,112 (92,825) 214,174 121,349	2015
							RMB’000 170,742 (83,448) (37,046) 50,248 141,220 191,468

Cash flows from operating activities

For the five months ended May 31, 2015, our net cash used in operating activities amounted to RMB170.7 million, primarily reflecting our profit before taxation of RMB195.5 million, as positively adjusted by (i) depreciation of property, plant and equipment of RMB85.8 million; and (ii) decrease in inventories of RMB83.5 million, partially offset primarily by a decrease in trade and other payables of RMB180.1 million due to our efforts to achieve a lower procurement cost by shortening the time for payment.

For the year ended December 31, 2014, our net cash generated from operating activities amounted to RMB605.4 million, primarily reflecting our profit before taxation of RMB486.4 million, as positively adjusted primarily by (i) depreciation of property, plant and equipment of RMB200.3 million; and (ii) increase in trade and other payables of RMB174.8 million mainly as a result of an increase in purchase of raw materials and energy, partially offset primarily by (i) an increase in trade and other receivables of RMB167.0 million mainly due to an increase of sales; and (ii) an increase in inventories of RMB107.8 million primarily due to an increase in finished goods stored at our warehouse as of December 31, 2014 for delivery in the beginning of 2015 as requested by some of our customers.

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FINANCIAL INFORMATION

For the year ended December 31, 2013, our net cash generated from operating activities amounted to RMB553.7 million, primarily reflecting our profit before tax of RMB264.0 million, as positively adjusted primarily by (i) depreciation of property, plant and equipment of RMB180.2 million; (ii) increase in trade and other payables of RMB260.9 million mainly as a result of an increase in purchase of raw materials and energy to support the increase in our production; and (iii) a decrease in inventories of RMB57.2 million mainly due to a decrease of inventory of PV glass as the PV industry started to recover in 2013, which enabled us to maintain a low level of inventory, partially offset primarily by an increase in trade and other receivable of RMB244.7 million mainly due to more bank acceptance bills were used by our domestic customers to settle balance due to us, which extended the cash receipt date.

For the year ended December 31, 2012, our net cash used in operating activities amounted to RMB9.3 million, primarily reflecting our profit before taxation of RMB63.4 million, as positively adjusted primarily by (i) depreciation of property, plant and equipment of RMB133.4 million; and (ii) increase in trade and other payables of RMB168.1 million mainly as a result of an increase in our purchases of raw materials and energy to support the increase in our production capacity due to the commencement of operations involving our 600-ton PV glass furnace in May 2013, offset primarily by (i) an increase in inventories of RMB133.3 million, primarily due to the slow down in the PV industry, which resulted in slower inventory turnover; and (ii) an increase in trade and other receivables of RMB310.0 million mainly due to financial difficulties faced by some of our customers as the PV industry experienced a slowdown during the year.

Cash flows from investing activities

For the five months ended May 31, 2015, our net cash used in investing activities amounted to RMB83.4 million, reflecting cash outflows primarily due to purchase of property, plant and equipment of RMB85.3 million, mainly included the installation of new flue-gas denitration facilities, which came into operation in May 2015, offset by cash inflows on release of pledged bank deposits of RMB22.5 million.

For the year ended December 31, 2014, our net cash used in investing activities amounted to RMB197.9 million, reflecting cash outflows primarily due to purchases of property, plant and equipment of RMB243.8 million, including the installation of new distributed PV systems and the purchase of new automated manufacturing machinery, offset by cash inflows on the disposal of property, plant and equipment and government grants received.

For the year ended December 31, 2013, our net cash used in investing activities amounted to RMB236.0 million, reflecting cash outflows primarily due to purchases of property, plant and equipment of RMB207.4 million because of the construction and installation of a new PV glass furnace with a daily maximum production capacity of 600 tons and the modification of two PV glass furnaces with a daily maximum production capacity of 300 tons each in 2013, and a net increase in pledged bank deposits of RMB34.6 million in 2013.

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FINANCIAL INFORMATION

For the year ended December 31, 2012, our net cash used in investing activities amounted to RMB289.1 million, reflecting cash outflows primarily due to (i) purchases of property, plant and equipment of RMB212.2 million mainly due to the construction of a new float glass furnace and a new PV glass furnace with a daily maximum production capacity of 600 tons each in 2012; and (ii) purchases of intangible assets of RMB113.3 million relating to the mining rights of the Mine.

Cash flows from financing activities

For the five months ended May 31, 2015, our net cash used in financing activities amounted to RMB37.0 million, reflecting cash outflows primarily due to repayment of loans in the amount of RMB691.4 million, offset primarily by loan proceeds received in the amount of RMB790.7 million.

For the year ended December 31, 2014, our net cash used in financing activities amounted to RMB480.5 million, reflecting cash outflows primarily due to repayment of loan in the amount of RMB1,306.2 million and payment for capital reduction in the amount of RMB309.8 million arising from the exit of our Financial Investors in 2014, offset primarily by loan proceeds received in the amount of RMB1,202.6 million. See also “History and Corporate Structure — Our Company — 3. Investments and Exit by our Financial Investors” in this document for details regarding the capital reduction.

For the year ended December 31, 2013, our net cash used in financing activities amounted to RMB228.8 million, primarily reflecting RMB1,424.9 million repayment of loan principal and RMB66.6 million interest payment in 2013, offset primarily by loan proceeds raised in the amount of RMB1,262.7 million.

For the year ended December 31, 2012, our net cash from financing activities amounted to RMB241.6 million, primarily reflecting cash inflows from loan proceeds of RMB1,130.8 million, offset primarily by RMB816.4 million repayment of loan principal and RMB72.8 million interest payment.

Working Capital

Our Directors believe that after considering the working capital needs for our operations and planned business expansion, our net current liabilities position as of September 30, 2015 and the financial resources available to us, including cash flow from our operations, bank balances and cash position as of September 30, 2015 and estimated net proceeds from the [REDACTED] of RMB[REDACTED] million (based on the [REDACTED] of HK$[REDACTED] per H Share, being the low end of the indicative [REDACTED] range), and the Sole Sponsor concurs, that we have sufficient working capital for our present requirements for at least the 12 months commencing from the date of this document.

As of May 31, 2015, we had (i) a syndicated loan in the principal amount of RMB40.0 million that our Controlling Shareholders provided guarantee in favor of us; and (ii) an entrusted loan due to Mr. Ruan Hongliang, one of our Controlling Shareholders, with a principal amount of RMB31.0 million at an interest rate of 5.88% per annum, of which, RMB29.0 million of principal remained

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FINANCIAL INFORMATION

outstanding. As at the Latest Practicable Date, all of these were fully repaid. In addition, as of May 31, 2015, we had amounts due to our Financial Investors of approximately RMB52.4 million. Since June 1, 2015 and up to the Latest Practicable Date, we repaid to our Financial Investors an amount of approximately RMB46.6 million. See also “Relationship with Controlling Shareholders — Independence from the Controlling Shareholders — Financial Independence” for details on the amounts due to our Financial Investors.

We expect to incur RMB207.6 million and RMB829.2 million in capital expenditures for the year ending December 31, 2015 and the year ending December 31, 2016, respectively, primarily to be used for the acquisition of property, plant and equipment for our business expansion. See “Future Plans and Use of Proceeds” for more information.

As of December 31, 2012 and 2014 and May 31, 2015, we had net current liabilities of RMB131.8 million, RMB257.5 million and RMB115.6 million, respectively. We have implemented the following internal control measures to manage and improve our liquidity:

sales reconciliation will be performed each month with our customers in order to ensure timely issuances of invoices. If sales reconciliation is not performed within the time limit, the commission and/or bonus that the relevant sales employee are entitled to will be reduced based on our internal policy and may be suspended until sales reconciliation has been performed in order to motivate our sales employees to complete reconciliations in time;
in the event that any of our customers defaults in payment of over one month, the responsible sales employee must actively follow-up for payment. We reserve the right to take legal actions if any account is overdue for three months and above; and
the commission and bonus of each sales employee is tied to the timing and method of payment from the sales he or she procured based on an internal scale in order to encourage such employee to negotiate a better payment option, such as payment by immediately available funds instead of bank acceptance bills, and to settle our invoices earlier rather than later.

In order to reduce our net current liabilities, we intend to obtain more long-term loans and gradually reduce our use of short-term loans to finance our working capital to the extent practicable and commercially viable. In July 2015, we obtained three banking facilities from our principal lenders: (i) a three-year banking facility of RMB446.0 million from Bank of China, Jiaxing Branch; (ii) a three-year banking facility of RMB323.5 million from Industrial and Commercial Bank of China, Jiaxing Branch; and (iii) a three-year banking facility of RMB220.0 million from China CITIC Bank, Jiaxing Branch. Furthermore, in September 2015, we obtained an additional banking facilities from Bank of China, Jiaxing Branch, one of our principal lenders, of RMB415.0 million. As of the Latest Practicable Date, we had unused banking facilities of RMB253.3 million.

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Furthermore, we have long-term relationships with our principal lenders. During the Track Record Period, we had made all interest payments on our bank borrowings in a timely manner and when our bank borrowings matured, we had been able to obtain new bank borrowings. In addition, we have obtained and intend to continue to obtain banking facilities from our principal bankers to support our general working capital and project financing needs. Our Directors do not expect any significant difficulty in obtaining the new financing if so required.

DESCRIPTION OF SELECTED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ITEMS

Current Assets and Liabilities

The following table sets forth details of our current assets and liabilities as of the dates indicated:

*Current assets* Prepaid lease payments . . Inventories . . . . . . . . . . . Trade and other receivables . . . . . . . . . . Pledged bank deposits . . . Bank balances and cash . . Total current assets . . . . . . . *Current liabilities* Trade and other payables . Dividends payable . . . . . . Tax liabilities . . . . . . . . . Borrowings . . . . . . . . . . . Deferred revenue . . . . . . . Long-term payables for the acquisition of mining right due within one year . . . . . . . . . . . . Total current liabilities . . . . Net current (liabilities)/assets . . . . . .		As of December	As of December	As of December	31, 2014 RMB’000 4,209 308,592 1,342,470 35,489 141,220 1,831,980 1,189,050 54,388 67,385 764,103 14,536 — 2,089,462 (257,482)		As of May 31, 2015 RMB’000 4,312 225,111 1,322,124 29,261 191,468 1,772,276 915,833 — 30,513 839,379 14,201 87,923 1,887,849 (115,573)	As of September 30,
		2012 RMB’000 4,188 257,961 952,809 7,664 125,243 1,347,865 697,654 — 19,762 750,101 12,156 — 1,479,673 (131,808)		2013 RMB’000 4,239 200,807 1,201,612 42,276 214,174 1,663,108 930,238 — 53,729 653,698 12,936 — 1,650,601 12,507				2015
								RMB’000 (unaudited) 4,312 224,959 1,640,169 70,074 184,434 2,123,948 1,047,231 250,000 56,524 882,384 14,201 89,365 2,339,705 (215,757)

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FINANCIAL INFORMATION

As of September 30, 2015, we had net current liabilities of RMB215.8 million compared to net current liabilities of RMB115.6 million as of May 31, 2015. The increase was primarily due to (i) dividends payable of RMB250.0 million declared in September 2015, which was subsequently settled in November 2015; and (ii) an increase in trade and other payables of RMB131.4 million as we increased our raw materials and energy consumption in the first nine months in 2015 in connection with our increased production and sales, partially offset by an increase of RMB318.0 million in trade and other receivables primarily as a result of an increased sales in the first nine months of 2015.

As of May 31, 2015, we had net current liabilities of RMB115.6 million compared to net current liabilities of RMB257.5 million as of December 31, 2014. This change was primarily due to (i) a decrease in trade and other payables of RMB273.2 million as we expedited payments to our suppliers as an effort to achieve lower procurement cost by shortening the time for payment; (ii) an increase in bank balances and cash position of RMB50.2 million as we increased our efforts to collect balances due from our customers; and (iii) a decrease in tax liabilities of RMB36.9 million mainly due to a larger portion of our profit before tax was contributed by our subsidiary, Zhejiang Jiafu, which as a high-technology enterprise enjoyed preferential enterprise income tax rate of 15% during the period, partially offset by (i) a decrease in inventories of RMB83.5 million as we made timely deliveries to our customers of finished goods stored at our warehouses; and (ii) an increase in our borrowings repayable within one year of RMB75.3 million mainly to fund an increase in our production and repayments for the exit of investment by our Financial Investors.

As of December 31, 2014, we had net current liabilities of RMB257.5 million compared to net current assets of RMB12.5 million as of December 31, 2013. This change was primarily due to (i) an increase in trade and other payables of RMB258.8 million as we increased our raw materials and energy consumption in 2014 in connection with our increase in production and sales; (ii) an increase in bank borrowings repayable within one year of RMB110.4 million to fund our business operations; (iii) an increase in dividend payable as we declared RMB54.4 million of dividend in 2014; and (iv) reduced bank balances and cash as of December 31, 2014 mainly due to the exit of investment by our Financial Investors. This increase was partially offset by (i) an increase in trade and other receivables in the amount of RMB140.9 million; and (ii) an increase in inventories of RMB107.8 million, mainly due to an increase in our sales.

Our net current assets increased by RMB144.3 million from net current liabilities of RMB131.8 million as of December 31, 2012 to net current assets of RMB12.5 million as of December 31, 2013. This increase was primarily due to (i) an increase in trade and other receivables of RMB248.8 million mainly as a result of our increased sales during the year; and (ii) an increase in bank balances and cash of RMB88.9 million. This increase was partially offset by (i) a decrease in inventories of RMB57.2 million mainly because the PV industry started to recover in 2013, which enabled us to maintain a lower level of inventory for PV glass; and (ii) an increase in trade and other payables of RMB232.6 million due to an increase in the purchases of raw materials and energy as a result of an increase in our production.

In addition, our net current liabilities of RMB131.8 million as of December 31, 2012 was mainly due to (i) a decrease in our revenue from our PV glass segment as compared to the previous year due to the downturn of the PV glass market in 2012, which in turn caused the decrease in our trade and bills receivables; and (ii) the funding of our capital expenditures through our short-term loans

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FINANCIAL INFORMATION

primarily for the constructions of our second 600-ton float glass furnace and our first 600-ton PV glass furnace. Our net current liabilities of RMB257.5 million as of December 31, 2014 was mainly due to the exit of investment by our Financial Investors. Furthermore, our net current liabilities of RMB115.6 million as of May 31, 2015 was primarily due to (i) the funding of our capital expenditures through our short-term loans primarily for our new flue-gas denitration facilities, which came into operation in May 2015; and (ii) the reclassification as current liabilities of the second tranche of the payment of consideration plus interest on the outstanding balance at the prevailing lending rate of PBOC due in April 2016 in the amount of RMB87.9 million for the acquisition of the mining rights of the Mine. See “History and Corporate Structure — Our Company — 3. Investments and Exit by our Financial Investors” for more information. See also “Risk Factors — Risks Relating to Our Business and Our Industry — We had net current liabilities as of December 31, 2012 and 2014 and May 31, 2015 and a significant level of indebtedness during the Track Record Period. We may be exposed to liquidity risks, and our business, financial conditions and results of operations may be materially and adversely affected as a result.”

Inventories

Our inventories primarily consist of raw materials and consumables, work in progress and finished goods. The following table sets forth the breakdown of our inventories as of the dates indicated:

Raw materials and consumables . . . . . . . . Work in progress . . . . . . . . . . . . . . . . . . Finished goods . . . . . . . . . . . . . . . . . . . .	As of December	As of December	31, 2014 RMB’000 128,321 25,285 154,986 308,592	As of May 31,
	2012 RMB’000 127,105 41,848 89,008 257,961	2013 RMB’000 102,745 31,872 66,190 200,807		2015
				RMB’000 100,589 22,906 101,616 225,111

Our inventories decreased by 27.1% to RMB225.1 million as of May 31, 2015 from RMB308.6 million as of December 31, 2014. The decrease in inventories was mainly because we made timely deliveries to our customers of finished goods stored at our warehouses.

Our inventories increased by 53.7% to RMB308.6 million as of December 31, 2014 from RMB200.8 million as of December 31, 2013. The increase in inventories was a result of an increase in inventory of finished goods stored at our warehouse as of December 31, 2014 for delivery in the beginning of 2015 as requested by some of our customers.

Our inventories decreased by 22.2% to RMB200.8 million as of December 31, 2013 from RMB258.0 million as of December 31, 2012. The decrease in inventory balance was mainly because the PV industry started to recover in 2013, which enabled us to maintain a lower level of inventory for PV glass.

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FINANCIAL INFORMATION

As of the Latest Practicable Date, based on our internal records, approximately RMB308.6 million, or 100%, of our inventories as of December 31, 2014 had been sold or utilized. The following table sets forth our average inventory turnover days for the periods indicated:

Average inventory turnover days(1). . . . . .	For the Year ended December 31, 2012 2013 2014 60 53 49	For the Year ended December 31, 2012 2013 2014 60 53 49	For the five months ended May 31,
	2012 60	2013 53	2015
			45

Note:

(1) Average inventory turnover days equal to the average of the opening and closing balances of inventories of the relevant period divided by cost of sales of the relevant year and multiplied by 365 days.

The average inventory turnover days decreased from 60 days for the year ended December 31, 2012 to 53 days for the year ended December 31, 2013, primarily as a result of an increase in the sales of our products as the PV industry recovered in 2013, and further decreased to 49 days for the year ended December 31, 2014 primarily as a result of an increase in the sales of our various glass products. The average inventory turnover days further decreased to 45 days for the five months ended May 31, 2015 as we made timely deliveries to our customers of finished goods stored at our warehouse.

Trade and Other Receivables

The following table sets forth a breakdown of our trade and other receivables as of the dates indicated:

Trade receivables . . . . . . . . . . . . . . . . . . . Less: Allowance for doubtful debts . . . . . Bills receivables . . . . . . . . . . . . . . . . . . . Trade and bills receivables, net . . . . . . . . Advances to suppliers . . . . . . . . . . . . . . . Other taxes recoverable . . . . . . . . . . . . . . Other receivables . . . . . . . . . . . . . . . . . . . Total trade and other receivables . . . . .		As of December	As of December	As of December	31, 2014 RMB’000 520,872 (29,102) 491,770 796,007 1,287,777 25,553 16,786 12,354 1,342,470		As of May 31,
		2012 RMB’000 448,213 (40,060) 408,153 401,925 810,078 36,793 97,654 8,284 952,809		2013 RMB’000 427,919 (24,744) 403,175 704,430 1,107,605 36,284 26,695 31,028 1,201,612			2015
							RMB’000 680,218 (38,635) 641,583 615,127 1,256,710 45,206 8,930 11,278 1,322,124

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Our trade and bills receivables primarily relate to outstanding amounts receivable by us from our customers (in the form of trade receivables and bills receivables) less any allowance for doubtful debts. Our trade and bills receivables increased by 36.7% from RMB810.1 million as of December 31, 2012 to RMB1,107.6 million as of December 31, 2013 primarily due to an increase of RMB302.5 million in bills receivable in 2013 compared to 2012 mainly because more of our domestic customers chose to make payments to us in the form of bank acceptance bills as we increased our sales volume in 2013.

Payment terms with our customers are mainly on credit, with credit period ranging from 30 to 90 days, but may be longer than 90 days due to the transportation time. For example, our credit term may start 90 days from the departure date of the container from the Port of Shanghai for some of our overseas PV glass customers as these customers have better creditworthiness or long-term relationship with us. The following table sets forth the aging analysis of our trade receivables net of allowance of doubtful debts presented based on the date of delivery of goods to customers as of the dates indicated:

Age Within 3 months . . . . . . . . . . . . . . . . . . . Over 3 months but within 1 year . . . . . . Over 1 year but within 2 years . . . . . . . . Over 2 years . . . . . . . . . . . . . . . . . . . . . .		As of December	As of December	As of December	31, 2014 RMB’000 401,012 83,481 6,264 1,013 491,770	As of May 31,
		2012 RMB’000 242,908 155,951 8,904 390 408,153		2013 RMB’000 363,141 33,221 4,709 2,104 403,175		2015
						RMB’000 507,477 122,960 8,651 2,495 641,583

Based on our internal records, as of the Latest Practicable Date, approximately RMB641.6 million, or 100.0%, of our trade receivables as of May 31, 2015 was settled; and approximately RMB571.3 million, or 92.9% of our bills receivables as of May 31, 2015 was settled. The following table sets forth the average turnover days of our trade and bills receivables for the periods indicated:

Average turnover days of our trade and bills receivables(1) . . . . . . . . . . . . . . . .	For the year ended December 31, 2012 2013 2014 158 160 154	For the year ended December 31, 2012 2013 2014 158 160 154	For the five months ended May 31,
	2012 158	2013 160	2015
			154

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Note:

(1) Average turnover days of our trade and bills receivables equal to the average of the opening and closing balances of trade and bills receivables for the relevant year or period divided by revenue and multiplied by the number of days during the year or period.

The average turnover days of our trade and bills receivables was relatively stable at 160 days for the year ended December 31, 2013 compared to 158 days for the year ended December 31, 2012. It decreased to 154 days for the year ended December 31, 2014 and remained stable at 154 days for the five months ended May 31, 2015 mainly due to our increased efforts to enhance the recovery of our receivables by establishing a credit monitoring department to review customer credit.

Trade receivables are initially recognized at fair value and subsequently measured at amortized costs less provision of impairment on bad and doubtful accounts. We have not provided any allowance of doubtful debts for the trade receivables which are past due (over 90 days from the date the invoices were issued) but not impaired because based on past experience, our management considers that those receivables are recoverable based on the good payment record of the customers, and therefore, we believe there has not been a significant deterioration in credit quality of our customers and the balances are still considered fully recoverable. In determining the recoverability of the trade receivables, we monitor change in the credit quality of the trade receivables since the credit was granted and up to the reporting date. However, the Directors considered that the concentration of credit risk on our trade receivables exists because most of our large customers are located in the PRC. We normally do not hold any collateral or other credit enhancements over these balances.

The following table sets forth the movement in allowance for doubtful debts on trade receivable for the years or periods indicated:

Opening balance . . . . . . . . . . . . . . . . . . . Provided for the year . . . . . . . . . . . . . . . Write-off for the year . . . . . . . . . . . . . . . At the end of the reporting year. . . . . . . .	As of December	As of December	31, 2014 RMB’000 24,744 18,352 (13,994) 29,102	As of May 31,
	2012 RMB’000 12,646 27,841 (427) 40,060	2013 RMB’000 40,060 3,680 (18,996) 24,744		2015
				RMB’000 29,102 9,573 (40) 38,635

We generally determines the allowance for doubtful debts based on the evaluation of collectability and aging analysis of accounts and on our management’s judgment, including the assessment of change in credit quality and the past collection history of each of our customers. As of December 31, 2012, 2013 and 2014 and May 31, 2015, the allowance for doubtful debts represented individually impaired trade receivables which have been overdue for a long time. Based on the foregoing, our Directors considered the recoverability of these debts to be low. During the Track Record Period, we mainly provided RMB18.5 million and RMB11.3 million of special allowance for

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doubtful debts to two of our PV glass customers in 2012 and 2014, respectively. In 2014, we established a credit control department to monitor the credit of our customers and to strengthen our approval procedures for credits provided to our customers. Our Group did not hold any collateral over these balances.

Trade and Other Payables

Trade and other payables principally consist of payments we owe to our raw material and energy suppliers. The following table sets forth the components of our trade and other payables as of the dates indicated:

Trade payables . . . . . . . . . . . . . . . . . . . . Notes payables . . . . . . . . . . . . . . . . . . . . Interest payable . . . . . . . . . . . . . . . . . . . Salary and bonus payables . . . . . . . . . . . Advanced receipts from customers . . . . . Other taxes payable . . . . . . . . . . . . . . . . Payables for acquisition of properties, plant and equipment . . . . . . . . . . . . . . Payables to previous shareholders . . . . . . Accruals and other payables . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .		As of December	As of December	As of December	31, 2014 RMB’000 809,641 92,009 7,450 21,554 21,674 23,566 88,258 110,601 14,297 1,189,050		As of May 31,
		2012 RMB’000 466,442 23,140 2,091 18,125 13,282 7,860 148,497 — 18,217 697,654		2013 RMB’000 758,695 — 1,767 18,787 13,700 8,763 120,494 — 8,032 930,238			2015
							RMB’000 677,875 35,200 9,393 25,435 12,716 44,095 51,454 52,367 7,298 915,833

Our trade and other payables increased from RMB697.7 million as of December 31, 2012 to RMB930.2 million as of December 31, 2013 and further increased to RMB1,189.1 million as of December 31, 2014, primarily as a result of increased purchases of raw materials and energy consumption commensurate with the increased production of our glass products. Our trade and other payables decreased from RMB1,189.1 million as of December 31, 2014 to RMB915.8 million as of May 31, 2015, primarily because we expedited our payments to our suppliers as an effort to achieve lower procurement cost by shortening the time for payment.

Based on our internal records, as of the Latest Practicable Date, approximately RMB677.9 million, or 100.0% of our trade payables as of May 31, 2015 was settled; and approximately RMB10.0 million, or 28.4% of our bills payables as of May 31, 2015 was settled.

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Our Group normally receives credit terms of up to 90 days from its suppliers. The following table sets forth the aging analysis of our trade payables as of the dates indicated:

Age Within 3 months . . . . . . . . . . . . . . . . . . . Over 3 months but within 180 days . . . . Over 180 days but within 1 year . . . . . . . Over 1 year but within 2 years . . . . . . . . Over 2 years . . . . . . . . . . . . . . . . . . . . . .		As of December	As of December	As of December	31, 2014 RMB’000 804,618 1,691 1,513 902 917 809,641		As of May 31,
		2012 RMB’000 456,626 5,589 1,650 1,920 657 466,442		2013 RMB’000 752,269 356 1,176 3,266 1,628 758,695			2015
							RMB’000 656,197 13,238 6,160 967 1,313 677,875

The following table sets forth the average turnover days of our trade and bills payables for the years or periods indicated:

Average turnover days of our trade and bills payables(1) . . . . . . . . . . . . . . . . . .	For the year ended December 31, 2012 2013 2014 days days days 127 143 159	For the year ended December 31, 2012 2013 2014 days days days 127 143 159	For the five months ended May 31,
	2012 days 127	2013 days 143	2015
			days 136

Note:

(1) Average turnover days of our trade and bills payables equal to the average of the opening and closing balances of trade and bills payables of the relevant year or period divided by cost of sales and multiplied by the number of days during the year or period.

The average turnover days of our trade and bills payables increased from 127 days for the year ended December 31, 2012 to 143 days for the year ended December 31, 2013, and further increased to 159 days for the year ended December 31, 2014 primarily because we took advantage of extended credit periods offered by certain of our suppliers. The average turnover days of our trade and bills payable decreased from 159 days for the year ended December 31, 2014 to 136 days for the five months ended May 31, 2015 as we expedited our payments to our suppliers as an effort to lower our

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procurement cost. Despite the increase in our trade and bills payables average turnover days between 2012 and 2014, we did not experience any breach of the payment terms of suppliers’ agreements that would materially and adversely affect our business and financial position.

CAPITAL EXPENDITURES

Historical Capital Expenditures

For the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, we incurred capital expenditures for the acquisition of property, plant and equipment in the amounts of RMB392.5 million, RMB191.9 million, RMB193.6 million and RMB55.6 million, respectively. The following table sets out our historical capital expenditures during the years or periods indicated:

Buildings . . . . . . . . . . . . . . . . . . . . . . . . Plant and machinery . . . . . . . . . . . . . . . . Motor vehicles . . . . . . . . . . . . . . . . . . . . Other equipment . . . . . . . . . . . . . . . . . . . Construction in progress . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . .	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 13,199 32,261 — 124,742 99,890 168,477 2,311 3,808 2,235 9,218 4,350 2,270 243,010 51,557 20,635 392,480 191,866 193,617	For the year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 13,199 32,261 — 124,742 99,890 168,477 2,311 3,808 2,235 9,218 4,350 2,270 243,010 51,557 20,635 392,480 191,866 193,617	For the five months ended May 31,
	2012 RMB’000 13,199 124,742 2,311 9,218 243,010 392,480	2013 RMB’000 32,261 99,890 3,808 4,350 51,557 191,866	2015
			RMB’000 110 18,636 2,081 664 34,108 55,599

The capital expenditures incurred in the year ended December 31, 2012 primarily related to the construction of a new float glass furnace and a new PV glass furnace and its complementary processing equipment, and our acquisition of the mining rights to the Mine. The capital expenditure incurred in the years ended December 31, 2013 and 2014 primarily related to the construction of one new PV glass furnace and its complementary processing equipment and the modification of two PV glass furnaces. The capital expenditure incurred for the five months ended May 31, 2015 primarily related to the installation of our new flue-gas denitration facilities, which came into operation in May 2015.

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FINANCIAL INFORMATION

Planned Capital Expenditures

As part of our future growth strategy, we are authorized to commit, and have committed to capital expenditures of RMB57.0 million as of May 31, 2015. We currently expect to incur approximately RMB207.6 million in capital expenditures for the year ending December 31, 2015 primarily to be used in the acquisition of property, plant and equipment for our business expansion.

We anticipate that our planned capital expenditures will be financed by cash generated from our operations, bank loans and proceeds from the [REDACTED]. The estimated amounts of expenditures set out above may vary from the actual amounts of expenditures for a variety of reasons, including changes in market conditions, competition, and other factors.

Our current plan with respect to future capital expenditures is subject to change based on the evolution of our business plan, including potential acquisitions, progress of our projects, market conditions and our outlook of future business conditions. As we continue to expand, we may incur additional capital expenditures. Our ability to obtain additional funding in the future is subject to a variety of uncertainties including our future results of operations, economic, political and other conditions in the PRC, PRC government policies relating to our industry and relevant rules and regulations in the PRC and Hong Kong regarding debt and equity financing. Other than as required by law, we do not undertake any obligation to publish updates of our capital expenditure plans. See “Forward-looking Statements” in this document.

CONTRACTUAL COMMITMENTS

Capital Commitments

Our capital commitments primarily relate to the acquisition of property, plant and equipment and construction in progress. The following table sets forth a summary of our capital commitments as of the dates indicated:

Capital expenditure in respect of acquisition of property, plant and equipment — Contracted but not provided for. . . . . .	As of December	As of December	31, 2014 RMB’000 65,430	As of May 31, 2015 RMB’000 56,982	As of September 30,
	2012 RMB’000 207,152	2013 RMB’000 103,721			2015
					RMB’000 (unaudited) 81,605

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FINANCIAL INFORMATION

In addition, as of December 31, 2012, 2013 and 2014 and May 31, 2015 there was an estimated commitment of RMB43.0 million by our Group to purchase a land use right under a project investment agreement we entered into with a local government in Anhui Province on August 12, 2010, pursuant to which we agreed to establish, among other things, certain glass productions lines within three to five years of the date of the agreement. Under this agreement, we have the right to acquire two parcels of land at a discount. In March 2011, we prepaid a deposit of RMB24.0 million to the local government for the acquisition of a land use right relating to this project. In July 2015, we entered into a supplemental agreement with the local government in Anhui Province to terminate the project investment agreement entered into in August 2010. Pursuant to the supplemental agreement, the deposit of RMB24.0 million will be used for the acquisition of land use rights for our PV glass processing facilities in Anhui Province. As of the Latest Practicable Date, we have not entered into any land acquisition agreement with the relevant government authority and we have not commenced construction of the PV glass processing facilities. See also “Business — Our Business Strategies — Expand our geographical coverage in China by expanding our production capabilities domestically” for details.

Operating Lease Commitments

During the Track Record Period, we leased a number of properties under operating leases, including representative offices. Leases are negotiated for a term of one to four years and rentals are fixed for an average of two years. The table below sets forth our future minimum lease payments payable under non-cancellable operating leases as of the dates indicated:

Within one year . . . . . .	As of December	As of December	31, 2014 RMB’000 36	As of May 31, 2015 RMB’000 36	As of September 30,
	2012 RMB’000 66	2013 RMB’000 —			2015
					RMB’000 (unaudited) 41

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FINANCIAL INFORMATION

INDEBTEDNESS

Bank and Other Loans

Our bank and other borrowings primarily consisted of short-term working capital loans and long-term project loans. Our bank and other loans as of December 31, 2012, 2013 and 2014, May 31, 2015 and September 30, 2015, being the latest practicable date for the purpose of indebtedness statement, were as follows:

Borrowings — Secured bank and other loans . . . . . . . . — Unsecured and unguaranteed bank loans . . . . . . . . . . . . — Fixed-rate borrowings . . . . . . . . — Variable-rate borrowings . . . . . . . .		As of December	As of December	As of December	31, 2014 RMB’000 852,413 47,690 900,103 207,190 692,913 900,103	As of May 31, 2015 RMB’000 999,379 — 999,379 87,075 912,304 999,379	As of September 30,
		2012 RMB’000 1,136,901 29,000 1,165,901 380,231 785,670 1,165,901		2013 RMB’000 931,558 72,140 1,003,698 432,698 571,000 1,003,698			2015
							RMB’000 (unaudited) 1,012,884 — 1,012,884 333,284 679,600 1,012,884

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Carrying amount repayable: — Within one year . . . . — More than one year, but not exceeding two years . . . . . . . . . — Over two years but not exceeding five years . . . . . . . . . . . . . — More than five years Less: Amounts shown under current liabilities . . . . . . . . . . Amounts shown under non-current liabilities . . . . . . . . .	As of December	As of December	31, 2014 RMB’000 764,103 136,000 — — 764,103 136,000	As of May 31, 2015 RMB’000 839,379 140,000 11,000 9,000 839,379 160,000	As of September 30,
	2012 RMB’000 750,101 255,800 160,000 — 750,101 415,800	2013 RMB’000 653,698 270,000 80,000 — 653,698 350,000			2015
					RMB’000 (unaudited) 882,384 102,000 21,750 6,750 1,012,884 882,384

We primarily borrow bank and other loans to supplement our working capital and to finance our capital expenditure. The bank and other loans as of December 31, 2012, 2013 and 2014 and May 31, 2015 were primarily denominated in Renminbi, while a small portion of our bank loans was denominated in U.S. dollars. Our fixed rate borrowings bore effective interest rates ranging from 5.04% to 6.00% per annum as of December 31, 2012, from 5.00% to 6.36% per annum as of December 31, 2013, from 5.88% to 6.30% per annum as of December 31, 2014 and from 5.00% to 5.20% per annum as of May 31, 2015. Our variable-rate borrowings bore effective interest rates ranging from 2.30% to 6.98% per annum as of December 31, 2012, from 2.71% to 6.60% per annum as of December 31, 2013, from 4.20% and 6.46% per annum as of December 31 2014 and from 0.68% to 6.50% per annum as of May 31, 2015.

Our secured bank and other loans of RMB1,136.9 million, RMB931.6 million and RMB852.4 million, and RMB999.4 million as of December 31, 2012, 2013 and 2014 and May 31, 2015, respectively, were secured by (i) prepaid lease payment of land use rights, (ii) buildings and plant and machineries that we own, (iii) notes receivables and (iv) guarantees provided by our Controlling Shareholders, namely, Mr. Ruan Hongliang, our Chairman and Ms. Jiang Jinhua, one of our executive Directors. All of the guarantees given by our Controlling Shareholders have been released on June 3, 2015, other than the guarantee given for a syndicated loan with a principal amount of RMB40.0 million, which has been released as at August 3, 2015. Furthermore, as of May 31, 2015, Mr. Ruan Hongliang has a loan due from us in the form of an entrusted loan with a principal amount of RMB31.0 million at an interest rate of 5.88% per annum, and which has been fully repaid by end of October 2015.

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FINANCIAL INFORMATION

As of September 30, 2015, being the latest practicable date for the purpose of indebtedness statement in this document, we had outstanding indebtedness of RMB1,012.9 million, all of which were interest-bearing bank and other borrowings that were secured by (i) prepaid lease payment of land use rights; (ii) buildings and plant and machinery that we owned; and (iii) notes receivables.

As of September 30, 2015, RMB882.4 million of our indebtedness was repayable within one year. As of September 30, 2015, our fixed-rate borrowings bore interest rates ranging from 3.0% to 5.3% per annum and our variable-rate borrowings bore interest rates ranging from 4.7% to 6.5% per annum. All bank and other loans as of September 30, 2015 were not guaranteed. As of September 30, 2015, the pledged bank deposits of RMB70.1 million were pledged for our notes payables and letter of credit.

Our Directors confirm that as of the Latest Practicable Date, there was no material covenant on any of our outstanding debt and there was no breach of any covenants during the Track Record Period and up to the Latest Practicable Date. Our Directors further confirm that our Group did not experience any difficulty in obtaining bank loans, default in payment of bank borrowings or breach of covenants, or cancellation of customer order or customer default during the Track Record Period and up to the Latest Practicable Date.

CONTINGENT LIABILITIES

As of September 30, 2015, our Group did not have any material contingent liabilities or guarantees. Our Directors have confirmed that there has not been any material change in the contingent liabilities of our Group since September 30, 2015 and up to the Latest Practicable Date.

Disclaimer

Except as disclosed above and apart from intra-group liabilities and normal trade payables, as of September 30, 2015, being the latest practicable date for determining our indebtedness, we did not have any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, hire purchases commitments, guarantees or other material contingent liabilities.

Our Directors confirm that there has not been any material change in our indebtedness and contingent liabilities since September 30, 2015.

LISTING EXPENSES

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discretionary bonus. The listing expenses above are the best estimate as of the Latest Practicable Date and for reference only and the actual amount may differ from this estimate. We do not expect these listing expenses to have a material impact on our results of operations for the year ending December 31, 2015.

FINANCIAL RATIOS

The following table sets forth our key financial ratios during the Track Record Period:

Net profit margin(1) . . . . . . . . . . . . Return on assets(2) . . . . . . . . . . . . . Return on equity(3) . . . . . . . . . . . . . Current ratio(4) . . . . . . . . . . . . . . . . Quick ratio(5) . . . . . . . . . . . . . . . . . Debt to equity ratios(6). . . . . . . . . . . Gearing ratio(7) . . . . . . . . . . . . . . . . Interest coverage ratio(8) . . . . . . . . .	As of/for the year ended December 31, 2012 2013 2014 4.0% 9.3% 13.9% 1.6% 5.2% 9.6% 3.9% 11.7% 23.7% 91.1% 100.8% 87.7% 73.7% 88.6% 72.9% 67.7% 45.4% 45.8% 75.9% 57.7% 54.3% 2.11 4.65 7.06	As of/for the year ended December 31, 2012 2013 2014 4.0% 9.3% 13.9% 1.6% 5.2% 9.6% 3.9% 11.7% 23.7% 91.1% 100.8% 87.7% 73.7% 88.6% 72.9% 67.7% 45.4% 45.8% 75.9% 57.7% 54.3% 2.11 4.65 7.06	As of/for the five months ended May 31,
	2012 4.0% 1.6% 3.9% 91.1% 73.7% 67.7% 75.9% 2.11	2013 9.3% 5.2% 11.7% 100.8% 88.6% 45.4% 57.7% 4.65	2015
			13.1% 4.0% 8.9% 93.9% 82.0% 44.4% 54.9% 7.84

Notes:

(1) Net profit margin equals our net profit after tax divided by revenue for the year or period multiplied by 100%.
(2) Return on assets equals net profit for the year or period divided by total assets as of the end of the year or period multiplied by 100%.
(3) Return on equity equals net profit for the year or period divided by total equity amounts as of the end of the year or period multiplied by 100%.
(4) Current ratio equals our current assets divided by current liabilities as of the end of the year or period multiplied by 100%.
(5) Quick ratio equals our current assets less inventories divided by current liabilities as of the end of the year or period multiplied by 100%.
(6) Debt to equity ratio equals total borrowings net of bank balances and cash at the end of the year or period divided by total equity at the end of the year or period multiplied by 100%.
(7) Gearing ratio equals total debt divided by total equity as of the end of the year or period multiplied by 100%. Total debt includes all interest-bearing bank loans.
(8) Interest coverage ratio equals profit before interest and tax of one year or period divided by finance cost of the same year or period.

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FINANCIAL INFORMATION

Analysis of Key Financial Ratios

Net Profit Margin

Our net profit margin increased from 4.0% for the year ended December 31, 2012 to 9.3% for the year ended December 31, 2013 and increased further to 13.9% for the year ended December 31, 2014, primarily attributable to the increase in the average selling price of our PV glass, an increase in our production efficiency, and decrease in our selling and administration expenses. Our net profit margin slightly decreased from 14.1% for the five months ended May 31, 2014 to 13.1% for the five months ended May 31, 2015, primarily attributable to the increase in our energy cost associated with our production, the decrease of average selling price of float glass and an increase in our research and development expenditure.

Return on Assets and Return on Equity

Our return on assets ratio increased from 1.6% for the year ended December 31, 2012 to 5.2% for the year ended December 31, 2013 and further increased to 9.6% for the year ended December 31, 2014 and our return of equity increase from 3.9% for the year ended December 31, 2012 to 11.7% for the year ended December 31, 2013, and further increased to 23.7% for the year ended December 31, 2014. These increases were primarily due to a substantial increase in our net profit. Our return on assets ratio for the five months ended May 31, 2015 was 4.0%, and on an annualized basis was 9.6%, which was comparable to that for the year ended December 31, 2014. Our return on equity ratio for the five months ended May 31, 2015 was 8.9%, and on an annualized basis was 21.4%, which was slightly less than that for the year ended December 31, 2014, primarily due to a small decrease in our net profit (on an annualized basis) due to an increase in energy cost associated with our production and an increase in our total equity.

Current Ratio and Quick Ratio

Our current ratio and quick ratio increased from 91.1% and 73.7% as of December 31, 2012, respectively, to 100.8% and 88.6% as of December 31, 2013, respectively. The increases in our current ratio and quick ratio were primarily a result of an increase of trade and bills receivables from the increase in sales, and a decrease in current borrowings.

Our current ratio and quick ratio decreased to 87.7% and 72.9% as of December 31, 2014, respectively. These decreases were mainly due to the payment for capital reduction in the amount of RMB309.8 million and additional payables of RMB110.6 million arising from the exit by our Financial Investors in 2014.

Our current ratio and quick ratio increased from 87.7% and 72.9% as of December 31, 2014, respectively, to 93.9% and 82.0% as of May 31, 2015. The increase in our current ratio and quick ratio were mainly due to a decrease in our trade and other payables as we expedited payments to our suppliers as an effort to enjoy a lower procurement cost by shortening the time for payment.

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FINANCIAL INFORMATION

Debt to Equity Ratio and Gearing Ratio

Our debt to equity ratio decreased from 67.7% as of December 31, 2012 to 45.4% as of December 31, 2013 mainly because of a decrease in bank borrowings from RMB1,165.9 million as of December 31, 2012 to RMB1,003.7 million as of December 31, 2013 and an increase in our total equity. Our debt to equity ratio remained relatively stable at 45.8% as of December 31, 2014. Our debt to equity ratio decreased from 45.8% as of December 31, 2014 to 44.4% as of May 31, 2015 primarily as a result of an increase in total equity.

Our gearing ratio also decreased from 75.9% as of December 31, 2012 to 57.7% as of December 31, 2013 primarily due to a decrease in bank borrowings and an increase in our total equity. It further decreased to 54.3% as of December 31, 2014 primarily as a result of a decrease in our bank borrowings, which was larger than the decrease in our total equity as a result of the exit of investment by our Financial Investors. Our gearing ratio remained relatively stable at 54.9% as of May 31, 2015.

RELATED PARTY TRANSACTIONS

We enter into transactions with our related parties from time to time. Our Directors believe that each of the related party transactions set out in note 33 to the Accountants’ Report in Appendix I to this document were conducted in ordinary course of business on an arm’s length basis and with normal commercial terms between the relevant parties. Our Directors are also of the view that our related party transactions during the Track Record Period would not distort our track record results or make our historical results not reflective of our future performance.

OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

As of the Latest Practicable Date, we had not entered into any off-balance sheet transactions.

DISTRIBUTABLE RESERVES

As of May 31, 2015, we had distributable reserves representing retained earnings of our Company of RMB907.0 million, which is available for distribution to our equity holders.

DIVIDEND POLICY

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DISCLOSURE REQUIRED UNDER CHAPTER 13 OF THE LISTING RULES

Our Directors have confirmed that, as of the Latest Practicable Date, there are no circumstances which, had we been required to comply with Rules 13.13 to 13.19 in Chapter 13 of the Listing Rules, would have given rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing Rules.

NO MATERIAL ADVERSE CHANGE

Our Directors confirm that, up to the date of this document, there has been no material adverse change in our financial or trading position since May 31, 2015 and there is no event since December 31, 2014 which would materially affect the information shown in the Accountants’ Report.

UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

The following statement of our unaudited pro forma adjusted consolidated net tangible assets is prepared in accordance with Rule 4.29 of the Listing Rules and is set out below to illustrate the effect of the [REDACTED] on our consolidated net tangible assets as of May 31, 2015 as if the [REDACTED] had taken place on that date.

Our unaudited pro forma adjusted consolidated net tangible assets has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of our consolidated net tangible assets as of May 31, 2015 or at any future dates following the [REDACTED]. It is prepared based on our audited consolidated net tangible assets as of May 31, 2015 as set out in the Accountants’ Report in Appendix I to this document, and adjusted as described below:

Audited

Based on the [REDACTED] of HK$[REDACTED] per Share . . . . . . . . Based on the [REDACTED] of HK$[REDACTED] per Share . . . . . . . .	consolidated net tangible assets of our Group attributable to owners of our Company as of May 31, 2015(1) RMB’000 [REDACTED] [REDACTED]	Estimated net proceeds from the REDACTED RMB’000 [REDACTED] [REDACTED]	Unaudited pro forma adjusted consolidated net tangible assets of our Group RMB’000 [REDACTED] [REDACTED]	Unaudited pro forma adjusted consolidated net tangible assets of our Group per Share(3)
				RMB HK$(4) [REDACTED] [REDACTED] [REDACTED] [REDACTED]

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FINANCIAL INFORMATION

Notes:

(1) The audited consolidated net tangible assets of our Group attributable to the owners of our Company as of May 31, 2015 is based on consolidated net assets of our Group of RMB1,819,073,000 and adjusted for intangible assets of RMB212,029,000 of our Group as extracted from the Accountants’ Report set out in Appendix I to this document.
(2) The estimated net proceeds from the [REDACTED] are based on [REDACTED] H shares to be issued under the [REDACTED] and the [REDACTED] of HK$[REDACTED] per share or HK$[REDACTED] per share after deduction of the underwriting fees and other related expenses payable by our Company, and do not take into account any Shares which may be issued upon the exercise of the [REDACTED] for the [REDACTED].
(3) The unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to the owners of our Company per share is calculated after the adjustments referred to in note (2) above and on the basis of [REDACTED] Shares issued and outstanding following the completion of the one to four share split and the [REDACTED] and assuming that the [REDACTED] for the [REDACTED] is not exercised. The unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to the owners of our Company per Share does not take into account of proposed dividends of RMB250.0 million declared on September 30, 2015. Had such dividends been taken into account, the unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners of our Company per Share will be further adjusted to RMB[REDACTED] (equivalent to HK$[REDACTED], based on the indicative [REDACTED] of HK$[REDACTED]), or RMB[REDACTED] (equivalent to HK$[REDACTED], based on the indicative [REDACTED] of HK$[REDACTED]).
(4) The translation between Renminbi and Hong Kong dollar has been made at the rate of RMB0.8188 to HK$1.00, PBOC rate prevailing on November 6, 2015. No representation is made that the Hong Kong dollar amounts have been, could have been or could be converted to Renminbi, or vice versa, at that rate or at any other rates or at all.
(5) Except for the one to four share split referred in note (3) above, no adjustments have been made to the unaudited pro forma adjusted consolidated net tangible assets attributable to the owners of our Company to reflect any trading results or other transactions which our Group entered into subsequent to May 31, 2015.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various types of market risks in the ordinary course of our business, including fluctuations in interest rates, foreign currency risks, credit risks and liquidity risks, as well as other price risks. We manage our exposure to these and other market risks through regular operating and financial activities.

Interest Rate Risk

We are exposed to fair value interest rate risk in relation to our fixed-rate borrowings. We are also exposed to cash flow interest rate risk in relation to variable-rate pledged bank deposits, bank balances and variable-rate borrowings. Currently, we do not have a specific policy to manage its interest rate risk, but the management will closely monitor interest rate exposures and consider hedging significant interest rate risk should the need arise.

Sensitivity Analysis

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of instruments that have floating rates. A 100 basis point increase or decrease for variable-rate borrowings and 50 basis point increase or decrease for variable-rate pledged bank deposits and bank balances is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rate.

If interest rate had been of 100 basis points higher/lower for variable-rate borrowings and 50 basis points higher/lower for variable-rate pledged bank deposits and bank balances and all other variables held constant, our post-tax profit would have decreased/increased by approximately RMB5.4 million, RMB3.3 million, RMB4.7 million and RMB6.3 million for the years ended December 31, 2012, 2013 and 2014 and for the five months ended May 31, 2015, respectively. In our management’s opinion, the sensitivity analysis is unrepresentative of the interest rate risk as the year end exposure does not reflect the exposure during the year.

Foreign Currency Risk

The primary economic environment in which the principal subsidiary of our Company operates is the PRC and its functional currency is RMB. However, certain sales and purchases of our Group are denominated in United States Dollars (“USD”), Euro Dollars (“EUR”) and Japanese Yen (“JPY”), which are currencies other than the functional currency of the relevant group entities and expose our Group to foreign currency risk.

The carrying amounts of our Group’s and our Company’s foreign currency denominated monetary assets and monetary liabilities at the end of each period are as follows:

Our Group

Liabilities	Liabilities	Assets	Assets
As of December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 61,844 244,283 307,462 517 — 6,348 — — — 62,361 244,283 313,810		As of December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 112,648 176,946 191,532 3,056 14,009 1,444 22,020 9,424 52,414 137,724 200,379 245,390		As of May 31,
2012 RMB’000 61,844 517 — 62,361	2013 RMB’000 244,283 — — 244,283	2012 RMB’000 112,648 3,056 22,020 137,724	2013 RMB’000 176,946 14,009 9,424 200,379	2015
				RMB’000 237,774 957 59,959 298,690

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FINANCIAL INFORMATION

Our Company

Liabilities	Liabilities	Assets	Assets
As of December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 47,450 243,198 223,882 517 — 4,548 — — — 47,967 243,198 228,430		As of December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 53,841 31,176 11,516 354 12,657 1,309 9,563 1,018 — 63,758 44,851 12,825		As of May 31,
2012 RMB’000 47,450 517 — 47,967	2013 RMB’000 243,198 — — 243,198	2012 RMB’000 53,841 354 9,563 63,758	2013 RMB’000 31,176 12,657 1,018 44,851	2015
				RMB’000 21,185 577 — 21,762

We have set up hedging policy to strike a balance between uncertainty and the risk of opportunity loss due to the growing significance of its exposures to fluctuations in foreign currency. Foreign exchange forward contracts can be used to eliminate the currency exposures. We have not entered into such forward contracts but the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

Sensitivity Analysis

The following table details our sensitivity to a 5% change in RMB against USD, EUR and JPY. 5% represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currencies denominated monetary items and adjusts their translation at each of the end of the reporting period for a 5% change in foreign currency rates.

A positive (negative) number below indicates an increase (decrease) in profit for the year where the relevant foreign currencies strengthen 5% against RMB. For a 5% weakening of the relevant foreign currency against RMB, there would be an equal and opposite impact on the net profit for the year.

Our Group

USD impact . . . . . . . . . . . . . . . . . . . . EUR impact . . . . . . . . . . . . . . . . . . . . JPY impact . . . . . . . . . . . . . . . . . . . .	Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,905 (2,525) (4,348) 95 526 (184) 826 354 1,966	Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,905 (2,525) (4,348) 95 526 (184) 826 354 1,966	Five months ended May 31,
	2012	2013 RMB’000 (2,525) 526 354	2015
	RMB’000 1,905 95 826		RMB’000 7,409 (118) 2,248

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Our Company

USD impact . . . . . . . . . . . . . . . . . . . . EUR impact . . . . . . . . . . . . . . . . . . . . JPY impact . . . . . . . . . . . . . . . . . . . .	Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 240 (7,951) (7,964) (6) 475 (122) 359 38 —	Year ended December 31, 2012 2013 2014 RMB’000 RMB’000 RMB’000 240 (7,951) (7,964) (6) 475 (122) 359 38 —	Five months ended May 31,
	2012 RMB’000 240 (6) 359	2013 RMB’000 (7,951) 475 38	2015
			RMB’000 244 (132) —

Credit risk

As of December 31, 2012, 2013 and 2014 and May 31, 2015, our maximum exposure to credit risk which will cause a financial loss to us due to failure to discharge an obligation by the counterparties provided by us is arising from the carrying amount of the respective recognized financial assets as stated in the consolidated statements of financial position.

In order to minimize the credit risk, the management of our Company has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up actions are taken to recover overdue debts. In addition, our Directors review the recoverability of each trade debt at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, our Directors consider that our credit risk is significantly reduced.

We have concentration of credit risk on liquid funds which are deposited with several banks. However, the credit risk on bank balances is limited because the majority of the counterparties are state-owned banks with good reputation or banks with good credit rating assigned by international credit-rating agencies and with good reputation.

We have concentration of credit risk on our trade receivables. For trade receivables, most of the large customers are located in the PRC. Outstanding balance of the five largest customers represented 35%, 23%, 35% and 38% of our trade receivables at December 31, 2012, 2013 and 2014 and May 31, 2015 respectively. In order to minimize the credit risk, management continuously monitors the level of exposure to ensure that follow-up actions and/or corrective actions are taken promptly to lower the risk exposure or to recover overdue balances.

As of December 31, 2012, 2013 and 2014 and May 31, 2015, included in our bills receivables were commercial bills of RMB70.0 million, nil, RMB100.1 million and RMB89.5 million, respectively. Our Directors are of the opinion that the credit risk of such commercial bills were insignificant as these bills were issued by selected customers, who maintained good credit quality with us.

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FINANCIAL INFORMATION

Liquidity risk

In the management of the liquidity risk, we monitor and maintain a level of cash and cash equivalents deemed adequate by the management to finance our operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

We had net current liabilities at December 31, 2012 and 2014 and May 31, 2015, respectively. We rely on borrowings, particularly bank and other loans, as a significant source of liquidity. As of December 31, 2012 and 2014, our current portion of bank loans amounted to RMB750.1 million and RMB764.1 million, respectively. As of May 31, 2015, we did not have any banking facilities and therefore, we did not have any unutilized banking facilities. Our Directors closely monitor the use of cash, taking into consideration of future operation cash flows, capital expenditure and expansion plans, and are of the opinion that the funds generated from our operations are sufficient to pay its liabilities when they fall due. Further, based on our past experiences, our Directors are of the opinion that there is no difficulty to roll over our current bank loans when they become due. In July 2015, we obtained three banking facilities from our principal lenders, namely, (i) a three-year banking facility of RMB446.0 million from Bank of China, Jiaxing Branch; (ii) a three-year banking facility of RMB323.5 million from Industrial and Commercial Bank of China, Jiaxing Branch; and (iii) a three-year banking facility of RMB220.0 million from China CITIC Bank, Jiaxing Branch. Furthermore, in September 2015, we obtained an additional banking facilities from Bank of China, Jiaxing Branch, one of our principal lenders, of RMB415.0 million. Our Directors consider that our liquidity risk is properly managed. As of the Latest Practicable Date, we had unutilized banking facilities of RMB253.3 millon.

The following table details our Group’s and our Company’s remaining contractual maturity for its non-derivative financial liabilities based on the agreed repayment terms. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which our Group can be required to pay. The table includes both interest and principal cash flows.

The Group As of December 31, 2012 Trade and other payables . Borrowings . . . . . . . . . Long-term payables for the acquisition of mining rights . . . . . . Total . . . . . . . . . . . . .	Weighted average interest rate	On demand or less than 3 months	3 months to 1 year	1 year to 2 years	2 years to 5 years	Over 5 years	Total undiscounted cash flows	Total undiscounted cash flows	Total carrying amount
	% N/A 6.78 6.55	RMB’000 658,387 124,761 —	RMB’000 — 672,007 —	RMB’000 — 281,402 —	RMB’000 — 173,635 100,243	RMB’000 — — 68,350		RMB’000 658,387 1,251,805 168,593 2,078,785	RMB’000 658,387 1,165,901 126,651 1,950,939
		783,148	672,007	281,402	273,878	68,350

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FINANCIAL INFORMATION

Weighted average interest rate	On demand or less than 3 months	3 months to 1 year	1 year to 2 years	2 years to 5 years	Over 5 years	Total undiscounted cash flows	Total carrying amount
% N/A 6.38 6.55 N/A 5.96 6.15 N/A 5.70 6.15 N/A 6.39 N/A 5.94	RMB’000 888,988 127,121 —	RMB’000 — 579,825 —	RMB’000 — 288,191 —	RMB’000 — 83,345 103,775	RMB’000 — — 64,818	RMB’000 888,988 1,078,482 168,593 2,136,063 1,122,256 928,218 168,593 2,219,067 833,587 1,041,596 168,593 2,043,776 474,519 910,856 1,385,375 650,580 806,927 1,457,507	RMB’000 888,988 1,003,698 134,175 2,026,861 1,122,256 900,103 141,650 2,164,009 833,587 999,379 144,573 1,977,539 474,519 836,126 1,310,645 650,580 744,198 1,394,778
	1,016,109	579,825	288,191	187,120	64,818
	1,122,256 177,207 —	— 609,073 —	— 141,938 94,272	— — —	— — 74,321
	1,299,463	609,073	236,210	—	74,321
	833,587 141,955 —	— 732,057 94,272	— 143,739 —	— 14,493 —	— 9,352 74,321
	975,542	826,329	143,739	14,493	83,673
	474,519 24,659	— 431,160	— 281,402	— 173,635	— —
	499,178	431,160	281,402	173,635	—
	650,580 41,033	— 394,358	— 288,191	— 83,345	— —
	691,613	394,358	288,191	83,345	—

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FINANCIAL INFORMATION

On demand or less than 3 months	3 months to 1 year	1 year to 2 years	2 years to 5 years	Over 5 years
RMB’000 766,432 89,022	RMB’000 — 465,876	RMB’000 — 141,938	RMB’000 — —	RMB’000 — —
855,454	465,876	141,938	—	—
650,133 63,303	— 473,350	— 142,439	— —	— —

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FUTURE PLANS AND USE OF PROCEEDS

FUTURE PLANS

See “Business — Our Business Strategies” for detailed description of our future plans.

USE OF PROCEEDS

We intend to use the proceeds from the [REDACTED] for the purposes and in the amounts set forth below:

Approximately 46.0%, or HK$[REDACTED] million, is expected to be used to establish overseas PV glass production and processing facilities in Vietnam by the second quarter of 2017. We expect that of this amount:
(i) approximately 59.1%, or HK$[REDACTED] million, is expected to be used for the construction of the furnace and the purchase of machinery and equipment for the production of PV raw glass and the processing of PV glass;
(ii) approximately 26.7%, or HK$[REDACTED] million, is expected to be used for buildings and construction; and
(iii) approximately 14.2%, or HK$[REDACTED] million, is expected to be used for the acquisition of the land.
Approximately 17.2%, or HK$[REDACTED] million, is expected to be used to establish new Low-E and Low-E composite glass processing facilities by the end of 2016 with an annual processing capacity of approximately 5.8 million sq.m. at our production facilities in Jiaxing, Zhejiang Province, the PRC. We expect that of this amount:
(i) Approximately 72.2%, or HK$[REDACTED] million, is expected to be used for the purchase and installation of machinery and equipment; and
(ii) Approximately 27.8%, or HK$[REDACTED] million, is expected to be used for the construction of the processing premises.

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FUTURE PLANS AND USE OF PROCEEDS

Approximately 9.7%, or HK$[REDACTED] million, is expected to be used for costs relating to research and development of new products and purchase of new equipment for the next three years;
Approximately 9.7%, or HK$[REDACTED] million, is expected to be used for working capital and other general corporate purposes;
Approximately 9.1%, or HK$[REDACTED] million, is expected to be used for modifying and upgrading an existing PV glass furnace with a daily maximum production capacity of 490 tons, which is expected to commence in the first quarter of 2016; and
Approximately 8.3%, or HK$[REDACTED] million, is expected to be used for the construction of new 15MW distributed PV systems for self-use, the construction of which is expected to commence in the second half of 2015 and to be completed in the first half of 2016.

If the [REDACTED] is set at the high-end or low-end of the proposed [REDACTED] range, the net proceeds of the [REDACTED] (assuming that the [REDACTED] is not exercised) will increase or decrease by approximately HK$[REDACTED] million, respectively. In such event, we will increase or decrease the allocation of the net proceeds to the above purposes on a pro-rata basis.

If the [REDACTED] is exercised in full, the net proceeds from the [REDACTED] will increase to approximately HK$[REDACTED] million, assuming an [REDACTED] of HK$[REDACTED] per [REDACTED], being the mid-point of the proposed [REDACTED] range. If the [REDACTED] is set at the high-end or low-end of the proposed [REDACTED] range, the net proceeds of the [REDACTED] (including the proceeds from the exercise of the [REDACTED]) will increase or decrease by approximately HK$[REDACTED] million, respectively. We intend to apply the additional net proceeds to the above uses in the proportions stated above.

To the extent that the net proceeds of the [REDACTED] are not immediately applied to the above purposes, it is our present intention that such net proceeds will be deposited into interest-bearing bank accounts with licensed banks and/or financial institutions in Hong Kong.

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UNDERWRITING

HONG KONG UNDERWRITERS

[REDACTED]

UNDERWRITING ARRANGEMENTS, COMMISSIONS AND EXPENSES

[REDACTED]

[REDACTED] Agreement

Pursuant to the [REDACTED], our Company is offering the [REDACTED] (subject to adjustment) for subscription by the public in Hong Kong subject to the terms and conditions of this document and the [REDACTED]. Pursuant to the [REDACTED] Agreement, and conditional upon, among other things, the Listing Committee granting the Listing of, and permission to deal in, the [REDACTED] to be issued as mentioned in this document (including any additional [REDACTED] which may be issued pursuant to the exercise of the [REDACTED]) subject to such customary conditions that may be imposed by the Stock Exchange and certain other conditions including the [REDACTED] being determined by our Company and the [REDACTED] (for themselves and on behalf of the Underwriters) by entering into the [REDACTED] on or before the [REDACTED], the Hong Kong Underwriters have agreed severally (not jointly or jointly and severally) to subscribe or procure subscribers to subscribe for, their respective applicable proportions of the [REDACTED] which are being offered but are not taken up under the [REDACTED].

[REDACTED]

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UNDERWRITING

[REDACTED]

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UNDERWRITING

[REDACTED]

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UNDERWRITING

[REDACTED]

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UNDERWRITING

[REDACTED]

International [REDACTED]

In connection with the [REDACTED], it is expected that our Company and our Controlling Shareholders will enter into the [REDACTED] with, among others, the International Underwriters on or about the [REDACTED].

Under the [REDACTED], subject to the terms and conditions set forth in such agreement, the International Underwriters are expected to severally (not jointly or jointly and severally) agree to subscribe or procure subscribers to subscribe for, the [REDACTED] initially being offered pursuant to the [REDACTED]. It is expected that the [REDACTED] may be terminated on similar grounds as the [REDACTED] Agreement. Potential investors are reminded that in the event that the [REDACTED] is not entered into, the [REDACTED] will not proceed. It is expected that pursuant to the [REDACTED], our Company and our Warranting Shareholders (as defined below) will make similar undertakings as those given pursuant to the [REDACTED] Agreement as described in the section headed “Undertakings pursuant to the [REDACTED] Agreement” below.

Our Company is expected to grant to the International Underwriters the [REDACTED] exercisable by the [REDACTED] on behalf of the International Underwriters, after consultation with the [REDACTED], at any time from the [REDACTED] up to 30 days from the last day for the lodging of applications under the [REDACTED], to require our Company to allot and issue up to an aggregate of [REDACTED] additional H Shares, representing in aggregate not more than 15% of the [REDACTED] initially available under the [REDACTED], at the same price per [REDACTED] under the [REDACTED], solely to cover over-allocation, if any, in the [REDACTED].

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UNDERWRITING

Commissions and Expenses

The Hong Kong Underwriters will receive an underwriting commission of [REDACTED]% of the aggregate [REDACTED] payable for the [REDACTED] initially offered under the [REDACTED], out of which they will pay any sub-underwriting commission. Assuming an [REDACTED] of HK$[REDACTED], which is the mid-point of the indicative [REDACTED] range, it is estimated that the Hong Kong Underwriters will receive a gross underwriting commission of approximately HK$[REDACTED]. For unsubscribed [REDACTED] reallocated to the [REDACTED], we will pay an underwriting commission at the rate applicable to the [REDACTED] and such commission will be paid to the International Underwriters and not the Hong Kong Underwriters. In addition, we may at our discretion pay the [REDACTED] each an additional incentive fee of up to [REDACTED]% of the aggregate proceeds of the [REDACTED] (including any proceeds from the exercise of the [REDACTED]). The aggregate commissions and fees, together with listing fees (excluding discretionary incentive fee), legal and other professional fees and printing and other expenses relating to the [REDACTED] and the SFC transaction levy and Stock Exchange trading fee are estimated to be RMB[REDACTED] in aggregate (based on the [REDACTED] of HK$[REDACTED], being the mid-point of the indicative [REDACTED] range between HK$[REDACTED] and HK$[REDACTED] and assuming the [REDACTED] is not exercised at all).

[REDACTED]

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UNDERWRITING

UNDERWRITING

[REDACTED]

HONG KONG UNDERWRITERS’ INTEREST IN OUR COMPANY

Except for its obligations under the [REDACTED] Agreement, none of the Hong Kong Underwriters is interested legally or beneficially in the shares of any of the members of our Group or has any right or option (whether legally enforceable or not) to subscribe for or purchase or to nominate persons to subscribe for or purchase securities in any of the members of our Group.

Following completion of the [REDACTED], the Hong Kong Underwriters and their affiliated companies may hold a certain portion of the H Shares as a result of fulfilling their obligations under the [REDACTED] Agreement.

[REDACTED]

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HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

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APPENDIX I

ACCOUNTANTS’ REPORT

==> picture [75 x 58] intentionally omitted <==

Deloitte Touche Tohmatsu 35/F One Pacific Place 88 Queensway Hong Kong

[●] 2015

The Directors Flat Glass Group Co., Ltd.

BOCI Asia Limited

Dear Sirs,

We set out below our report on the financial information of Flat Glass Group Co., Ltd.[#] 福萊特玻璃集團股份有限公司, (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for each of the three years ended 31 December 2014 and five months ended 31 May 2015 (the “Track Record Period”) (the “Financial Information”) for inclusion in the document of the Company dated [●] 2015 (the “Document”) in connection with the proposed initial public offering and listing of the Company’s shares (the “Listing”) on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company was established in the People’s Republic of China (the “PRC”) on 24 June 1998 (date of establishment) as a limited liability company under the Company Law of the PRC. On 29 December 2005, the Company was converted into a joint stock limited liability company. The registration office of the Company is 1999 Yunhe Road, Xiuzhou District, Jiaxing, Zhejiang Province, the PRC.

Particulars of the Company’s subsidiaries during the Track Record Period and at the date of this report are as follows:

Equity interest attributable to the Group as at 31 December 31 May the date of this report 2012 2013 2014 2015 % % % % % n/a 100 100 100 100 100 100 100 100 100	Equity interest attributable to the Group as at 31 December 31 May the date of this report 2012 2013 2014 2015 % % % % % n/a 100 100 100 100 100 100 100 100 100	Equity interest attributable to the Group as at 31 December 31 May the date of this report 2012 2013 2014 2015 % % % % % n/a 100 100 100 100 100 100 100 100 100	Principal activities
31 December 2012 2013 2014 % % % n/a 100 100 100 100 100		31 May 2015 % 100 100
2012 % n/a 100	2013 % 100 100
			Trading of glass products Manufacture and sale of glass products

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APPENDIX I ACCOUNTANTS’ REPORT

Equity interest attributable to the Group as at 31 December 31 May the date of this report 2012 2013 2014 2015 % % % % % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 n/a n/a 100 100 100 100 100 100 100 100	Equity interest attributable to the Group as at 31 December 31 May the date of this report 2012 2013 2014 2015 % % % % % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 n/a n/a 100 100 100 100 100 100 100 100	Equity interest attributable to the Group as at 31 December 31 May the date of this report 2012 2013 2014 2015 % % % % % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 n/a n/a 100 100 100 100 100 100 100 100	Principal activities
31 December 2012 2013 2014 % % % 100 100 100 100 100 100 100 100 100 n/a n/a 100 100 100 100		31 May 2015 % 100 100 100 100 100
2012 % 100 100 100 n/a 100	2013 % 100 100 100 n/a 100
			Manufacture and sale of glass products Manufacture and sale of glass products Extraction of a quartzite mine located in the PRC Electricity generation of solar battery module Manufacture and sale of glass products

* Limited liability company established in the PRC.

The English name is translated for identification purpose only.

At the date of this report, all the subsidiaries are held by the Company directly. The Company and its subsidiaries have adopted December 31 as their financial year end date for statutory financial reporting purposes.

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APPENDIX I

ACCOUNTANTS’ REPORT

The statutory financial statements of the Company and its subsidiaries established in the PRC, namely Shanghai Flat, Zhejiang Jiafu, Zhejiang Flat, Jiaxing Flat, Anhui Flat Materials, and Anhui Flat were audited by the following certified public accountants for each of the three years ended 31 December 2014, or since their respective dates of establishment to 31 December 2014 where this is a shorter period, as appropriate, and were prepared in accordance with the relevant accounting principles and financial regulations in the PRC:

Name of entities The Company/Shanghai Flat/Zhejiang Jiafu/ Zhejiang Flat Jiaxing Flat Anhui Flat Materials/Anhui Flat	Financial year Year ended 31 December 2012 Years ended 31 December 2013 and 31 December 2014 From 11 March 2014 to 31 December 2014 Year ended 31 December 2012 Years ended 31 December 2013 and 31 December 2014	Name of statutory auditor
		中磊會計師事務所有限責任公司浙江分所 Zhonglei Certified Public Accountants Co., Ltd Zhejiang Branch 利安達會計師事務所浙江江南分所 Reanda Certified Public Accountants LLP Zhejiang Jiangnan Branch 利安達會計師事務所浙江江南分所 Reanda Certified Public Accountants LLP Zhejiang Jiangnan Branch 中磊會計師事務所有限責任公司浙江分所 Zhonglei Certified Public Accountants Co., Ltd Zhejiang Branch N/A

The statutory financial statements of Flat (Hong Kong) Co., Ltd. from its date of incorporation to 31 December 2014 were prepared in accordance with the Hong Kong Financial Reporting Standards and were audited by So Yat Chun Giles, Certified Public Accountants (practising), a firm of certified public accountants registered in Hong Kong.

No audited statutory financial statements have been prepared for Anhui Flat Materials and Anhui Flat for the years ended 31 December 2013 and 31 December 2014 as there is no statutory audit requirement.

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APPENDIX I

ACCOUNTANTS’ REPORT

For the purpose of this report, the directors of the Company have prepared the consolidated financial statements of the Group for the Track Record Period in accordance with accounting policies which confirm with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (the “IASB”) (the “Underlying Financial Statements”).

We have undertaken an independent audit on the Underlying Financial Statements in accordance with International Standards on Auditing and examined the Underlying Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountants” as recommended by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

The Financial Information for the Track Record Period set out in this report has been prepared from the Underlying Financial Statements. No adjustments are deemed necessary by us to the Underlying Financial Statements in the preparation of this report for inclusion in the Document.

The Underlying Financial Statements are the responsibility of the directors of the Company who approved their issue. The directors of the Company are also responsible for the contents of the Document in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the financial position of the Company and the Group as of 31 December 2012, 2013, 2014 and 31 May 2015 and of the financial performance of the Group for the Track Record Period.

The comparative consolidated statement of profit or loss and other comprehensive income, consolidated statement of cash flows and the consolidated statement of changes in equity for the five months ended 31 May 2014 together with the notes thereon have been extracted from the Group’s unaudited consolidated financial statements for the same period (the “May 2014 Financial Information”) which was prepared by the directors of the Company solely for the purpose of this report. We conducted our review of the May 2014 Financial Information in accordance with International Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. Our review of the May 2014 Financial Information consists of making enquires, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the May 2014 Financial Information. Based on our review, nothing has come to our attention that causes us to believe that the May 2014 Financial Information is not prepared, in all material respects, in accordance with the accounting policies consistent with those used in the preparation of the Financial Information which conform with IFRS.

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APPENDIX I ACCOUNTANTS’ REPORT

I. FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenue . . . . . . . . . . . . . Cost of sales . . . . . . . . . Gross profit . . . . . . . . . . Other income . . . . . . . . . Other gains and losses . . Selling and marketing expenses . . . . . . . . . . . Administration expenses. Research and development expenditure . . . . . . . . Finance cost. . . . . . . . . . Profit before tax . . . . . . Income tax expense . . . . Profit and total comprehensive income for the year/period . . . EARNING PER SHARE -Basic and diluted (RMB cents) . . . . . . . .	NOTES 7 8 8 9 10 11 14	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,488,557 2,187,283 2,833,306 (1,167,434) (1,592,422) (1,904,972) 321,123 594,861 928,334 20,339 15,256 20,479 (27,963) (11,134) (38,522) (57,921) (102,246) (108,845) (75,320) (93,769) (105,458) (59,894) (66,582) (129,333) (56,958) (72,343) (80,251) 63,406 264,043 486,404 (3,523) (60,428) (93,737) 59,883 203,615 392,667 4.17 14.16 29.09	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,488,557 2,187,283 2,833,306 (1,167,434) (1,592,422) (1,904,972) 321,123 594,861 928,334 20,339 15,256 20,479 (27,963) (11,134) (38,522) (57,921) (102,246) (108,845) (75,320) (93,769) (105,458) (59,894) (66,582) (129,333) (56,958) (72,343) (80,251) 63,406 264,043 486,404 (3,523) (60,428) (93,737) 59,883 203,615 392,667 4.17 14.16 29.09	Five months ended 31 May	Five months ended 31 May
		2012 RMB’000 1,488,557 (1,167,434) 321,123 20,339 (27,963) (57,921) (75,320) (59,894) (56,958) 63,406 (3,523) 59,883 4.17	2013 RMB’000 2,187,283 (1,592,422) 594,861 15,256 (11,134) (102,246) (93,769) (66,582) (72,343) 264,043 (60,428) 203,615 14.16	2014 RMB’000 (unaudited) 1,149,794 (770,543) 379,251 6,495 (22,360) (45,312) (43,472) (37,085) (35,856) 201,661 (39,583) 162,078 12.01	2015
					RMB’000 1,237,432 (888,314) 349,118 14,282 (4,569) (46,588) (43,849) (44,377) (28,566) 195,451 (33,912) 161,539 11.97

— I-5 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Non-Current Assets Property, plant and equipment . . . . Prepaid lease payments . . . . . . . . . Prepayment and intangible assets . . Available-for-sale investment, at cost . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets. . . . . . . . . . . . . Prepayment for acquisition of property, plant and equipment . . Deposit for acquisition of land use right . . . . . . . . . . . . . . . . . . . . . Current Assets Prepaid lease payments . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . Trade and other receivables . . . . . . Pledged bank deposits . . . . . . . . . . Bank balances and cash . . . . . . . . . Current Liabilities Trade and other payables . . . . . . . . Dividends payable . . . . . . . . . . . . . Tax liabilities. . . . . . . . . . . . . . . . . Borrowings . . . . . . . . . . . . . . . . . . Deferred revenue . . . . . . . . . . . . . . Long-term payables for the acquisition of mining right due within one year (short-term portion) . . . . . . . . . . . . . . . . . . . Net Current (Liabilities) Assets . . . Total Assets Less Current Liabilities . . . . . . . . . . . . . . . . .	NOTES 15 16 17 18 20 16 21 22 23 23 24 25 26 25a	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,784,000 1,792,248 1,760,574 185,570 183,157 178,947 234,659 237,585 227,787 4,000 4,000 4,000 33,684 29,007 39,512 30,443 19,447 37,400 24,000 24,000 24,000 2,296,356 2,289,444 2,272,220 4,188 4,239 4,209 257,961 200,807 308,592 952,809 1,201,612 1,342,470 7,664 42,276 35,489 125,243 214,174 141,220 1,347,865 1,663,108 1,831,980 697,654 930,238 1,189,050 — — 54,388 19,762 53,729 67,385 750,101 653,698 764,103 12,156 12,936 14,536 — — — 1,479,673 1,650,601 2,089,462 (131,808) 12,507 (257,482) 2,164,548 2,301,951 2,014,738	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,784,000 1,792,248 1,760,574 185,570 183,157 178,947 234,659 237,585 227,787 4,000 4,000 4,000 33,684 29,007 39,512 30,443 19,447 37,400 24,000 24,000 24,000 2,296,356 2,289,444 2,272,220 4,188 4,239 4,209 257,961 200,807 308,592 952,809 1,201,612 1,342,470 7,664 42,276 35,489 125,243 214,174 141,220 1,347,865 1,663,108 1,831,980 697,654 930,238 1,189,050 — — 54,388 19,762 53,729 67,385 750,101 653,698 764,103 12,156 12,936 14,536 — — — 1,479,673 1,650,601 2,089,462 (131,808) 12,507 (257,482) 2,164,548 2,301,951 2,014,738	As at 31 May	As at 31 May
		2012 RMB’000 1,784,000 185,570 234,659 4,000 33,684 30,443 24,000 2,296,356 4,188 257,961 952,809 7,664 125,243 1,347,865 697,654 — 19,762 750,101 12,156 — 1,479,673 (131,808) 2,164,548	2013 RMB’000 1,792,248 183,157 237,585 4,000 29,007 19,447 24,000 2,289,444 4,239 200,807 1,201,612 42,276 214,174 1,663,108 930,238 — 53,729 653,698 12,936 — 1,650,601 12,507 2,301,951		2015
					RMB’000 1,730,055 182,195 215,029 4,000 39,715 30,274 24,000 2,225,268 4,312 225,111 1,322,124 29,261 191,468 1,772,276 915,833 — 30,513 839,379 14,201 87,923 1,887,849 (115,573) 2,109,695

— I-6 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I		ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT
Non-Current Liabilities Borrowings . . . . . . . . . . . . . . . . . . Deferred revenue . . . . . . . . . . . . . . Long-term payables for the acquisition of mining rights . . . . Net Assets. . . . . . . . . . . . . . . . . . . Capital and Reserves Share capital . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . Total Equity . . . . . . . . . . . . . . . . .	NOTES 25 26 25a 27 28	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 415,800 350,000 136,000 86,035 78,099 79,554 126,651 134,175 141,650 628,486 562,274 357,204 1,536,062 1,739,677 1,657,534 359,400 359,400 337,500 1,176,662 1,380,277 1,320,034 1,536,062 1,739,677 1,657,534		As at 31 May
		2012 RMB’000 415,800 86,035 126,651 628,486 1,536,062 359,400 1,176,662 1,536,062	2013 RMB’000 350,000 78,099 134,175 562,274 1,739,677 359,400 1,380,277 1,739,677		2015
					RMB’000 160,000 73,972 56,650 290,622 1,819,073 337,500 1,481,573 1,819,073

— I-7 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

STATEMENTS OF FINANCIAL POSITION

Non-Current Assets Property, plant and equipment . . . . Prepaid lease payments . . . . . . . . . Prepayment and intangible assets . . Available-for-sale investment . . . . . Deferred tax assets. . . . . . . . . . . . . Investment in subsidiaries . . . . . . . Amount due from a subsidiary . . . . Prepayment for acquisition of property, plant and equipment. . . Current Assets Prepaid lease payments . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . Trade and other receivables . . . . . . Pledged bank deposits . . . . . . . . . . Bank balances and cash . . . . . . . . . Current Liabilities Trade and other payables . . . . . . . . Dividends payable . . . . . . . . . . . . Tax liabilities. . . . . . . . . . . . . . . . . Borrowings . . . . . . . . . . . . . . . . . . Deferred revenue . . . . . . . . . . . . . . Amount due to subsidiaries . . . . . . Net Current Assets (Liabilities) . . . Total Assets Less Current Liabilities . . . . . . . . . . . . . . . . .	NOTES 15 16 17 18 19 19a 16 21 22 23 23 24 25 26 19a	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,287,451 1,344,639 1,306,408 134,087 132,848 129,812 5,164 3,153 1,315 4,000 4,000 4,000 17,992 13,735 17,111 184,092 198,492 289,992 113,300 88,823 78,823 27,721 14,846 23,843 1,773,807 1,800,536 1,851,304 3,014 3,065 3,035 152,278 121,229 174,312 779,035 1,041,622 937,436 5,697 40,585 16,140 77,506 134,148 23,489 1,017,530 1,340,649 1,154,412 493,301 677,981 838,473 — — 54,388 17,479 51,569 48,953 420,326 394,198 506,612 7,890 8,300 9,230 2,388 2,388 26,549 941,384 1,134,436 1,484,205 76,146 206,213 (329,793) 1,849,953 2,006,749 1,521,511	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,287,451 1,344,639 1,306,408 134,087 132,848 129,812 5,164 3,153 1,315 4,000 4,000 4,000 17,992 13,735 17,111 184,092 198,492 289,992 113,300 88,823 78,823 27,721 14,846 23,843 1,773,807 1,800,536 1,851,304 3,014 3,065 3,035 152,278 121,229 174,312 779,035 1,041,622 937,436 5,697 40,585 16,140 77,506 134,148 23,489 1,017,530 1,340,649 1,154,412 493,301 677,981 838,473 — — 54,388 17,479 51,569 48,953 420,326 394,198 506,612 7,890 8,300 9,230 2,388 2,388 26,549 941,384 1,134,436 1,484,205 76,146 206,213 (329,793) 1,849,953 2,006,749 1,521,511	As at 31 May	As at 31 May
		2012 RMB’000 1,287,451 134,087 5,164 4,000 17,992 184,092 113,300 27,721 1,773,807 3,014 152,278 779,035 5,697 77,506 1,017,530 493,301 — 17,479 420,326 7,890 2,388 941,384 76,146 1,849,953	2013 RMB’000 1,344,639 132,848 3,153 4,000 13,735 198,492 88,823 14,846 1,800,536 3,065 121,229 1,041,622 40,585 134,148 1,340,649 677,981 — 51,569 394,198 8,300 2,388 1,134,436 206,213 2,006,749		2015
					RMB’000 1,295,784 128,547 765 4,000 16,288 290,053 70,797 12,583 1,818,817 3,035 143,243 1,015,010 14,220 92,115 1,267,623 737,943 — 14,205 512,962 9,230 222,185 1,496,525 (228,902) 1,589,915

— I-8 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I		ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT
Non-Current Liabilities Borrowings . . . . . . . . . . . . . . . . . . Deferred revenue . . . . . . . . . . . . . . Net Assets. . . . . . . . . . . . . . . . . . . Capital and Reserves Share capital . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . Total Equity . . . . . . . . . . . . . . . . .	NOTES 25 26 27 28	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 415,800 350,000 136,000 62,793 59,493 59,563 478,593 409,493 195,563 1,371,360 1,597,256 1,325,948 359,400 359,400 337,500 1,011,960 1,237,856 988,448 1,371,360 1,597,256 1,325,948		As at 31 May
		2012 RMB’000 415,800 62,793 478,593 1,371,360 359,400 1,011,960 1,371,360	2013 RMB’000 350,000 59,493 409,493 1,597,256 359,400 1,237,856 1,597,256		2015
					RMB’000 140,000 55,717 195,717 1,394,198 337,500 1,056,698 1,394,198

— I-9 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Balance at 1 January 2012 . . . Profit and total comprehensive income for the year . . . . . Transfer . . . . . . . . . . . . . Balance at 31 December 2012 . Profit and total comprehensive income for the year . . . . . Transfer . . . . . . . . . . . . . Balance at 31 December 2013 . Profit and total comprehensive income for the year . . . . . Reduction of capital (note ii) . Transfer (note iii) . . . . . . . . Dividends (note 14a) . . . . . . Balance at 31 December 2014 . Profit and total comprehensive income for the period . . . . Balance at 31 May 2015 . . . .		Share capital RMB’000 359,400 — — 359,400 — — 359,400 — (21,900) — — 337,500 — 337,500		Share premium RMB’000 126,132 — — 126,132 — — 126,132 — (126,132) — — — — —	Production safety fees RMB’000 — — — — — — — — — 673 — 673 — 673		Equity- settled employee benefits reserve RMB’000 (note i) 3,277 — — 3,277 — — 3,277 — — — — 3,277 — 3,277		Statutory surplus reserve RMB’000 (note 28) 205,852 — 37,837 243,689 — 21,443 265,132 — — (31,230) — 233,902 — 233,902		Retained earnings RMB’000 781,518 59,883 (37,837) 803,564 203,615 (21,443) 985,736 392,667 (272,390) 30,557 (54,388) 1,082,182 161,539 1,243,721		Total
													RMB’000 1,476,179 59,883 — 1,536,062 203,615 — 1,739,677 392,667 (420,422) — (54,388) 1,657,534 161,539 1,819,073

Notes:

(i) The equity-settled employee benefits reserve arose in 2009 when certain key management personnel of the Group subscribed for 4.41% of the newly issued shares of the Company. The Group recognised the share-based payment expenses of approximately RMB3,277,000 in 2009 which represented the difference between the fair value of those shares of approximately RMB15,690,000 and the consideration received by the Company of approximately RMB12,413,000.
(ii) On 1 January 2014, certain shareholders of the Company entered into agreements with the Company to reduce share capital by 21,900,000 shares with consideration of RMB19.1973 each.
(iii) For the year ended 31 December 2014, the Group transferred aggregately RMB27,413,000 from retained earnings to statutory surplus reserve. A subsidiary of the Company transferred certain statutory surplus reserve amounting to RMB58,643,000 to the retained earnings to offset its accumulated losses.

— I-10 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

CONSOLIDATED STATEMENTS OF CASH FLOWS

OPERATING ACTIVITIES Profit before tax . . . . . . . . . . . . . . . Adjustments for: Finance costs. . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . Depreciation of property, plant and equipment . . . . . . . . . . . . . . . . . . Amortisation of intangible assets. . . Release of prepaid lease payments . Allowance for doubtful debts, net . . Impairment of property, plant and equipment . . . . . . . . . . . . . . . . . . Loss (gain) on disposal of property, plant and equipment. . . . . . . . . . . Gain on disposal of land use right. . Deferred revenue . . . . . . . . . . . . . . Operating cash flows before movements in working capital . . . (Increase) decrease in inventories . . (Increase) decrease in trade and other receivables . . . . . . . . . . . . . Increase (decrease) in trade and other payables . . . . . . . . . . . . . . . Cash generated from operations. . . . Income taxes paid . . . . . . . . . . . . . . NET CASH (USED IN) FROM OPERATING ACTIVITIES. . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 63,406 264,043 486,404 56,958 72,343 80,251 (403) (2,110) (2,030) 133,363 180,203 200,322 2,302 2,527 10,708 4,188 4,188 4,240 27,841 3,680 18,352 — — 11,600 112 3,065 (900) — (13,611) — (10,683) (12,156) (12,936) 277,084 502,172 796,011 (133,317) 57,154 (107,785) (310,044) (244,716) (166,977) 168,094 260,911 174,764 1,817 575,521 696,013 (11,155) (21,784) (90,586) (9,338) 553,737 605,427	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 63,406 264,043 486,404 56,958 72,343 80,251 (403) (2,110) (2,030) 133,363 180,203 200,322 2,302 2,527 10,708 4,188 4,188 4,240 27,841 3,680 18,352 — — 11,600 112 3,065 (900) — (13,611) — (10,683) (12,156) (12,936) 277,084 502,172 796,011 (133,317) 57,154 (107,785) (310,044) (244,716) (166,977) 168,094 260,911 174,764 1,817 575,521 696,013 (11,155) (21,784) (90,586) (9,338) 553,737 605,427	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 63,406 56,958 (403) 133,363 2,302 4,188 27,841 — 112 — (10,683) 277,084 (133,317) (310,044) 168,094 1,817 (11,155) (9,338)	2013 RMB’000 264,043 72,343 (2,110) 180,203 2,527 4,188 3,680 — 3,065 (13,611) (12,156) 502,172 57,154 (244,716) 260,911 575,521 (21,784) 553,737	2014 RMB’000 (unaudited) 201,661 35,856 (407) 81,526 1,284 1,774 15,284 11,053 (802) — (5,236) 341,993 (74,693) (125,147) 43,851 186,004 (58,675) 127,329	2015
				RMB’000 195,451 28,566 (476) 85,841 12,758 1,780 9,573 — 21 — (5,917) 327,597 83,481 10,773 (180,122) 241,729 (70,987) 170,742

— I-11 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

INVESTING ACTIVITIES Interest received . . . . . . . . . . . . . . . Proceeds on disposal of property, plant and equipment. . . . . . . . . . . Proceeds on disposal of land use right. . . . . . . . . . . . . . . . . . . . . . . Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . Payments for prepaid lease land . . . Purchase of intangible assets . . . . . . Pledged bank deposits placed . . . . . Release of pledged bank deposits . . Assets-related government grants received . . . . . . . . . . . . . . . . . . . NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . . . . . . . . FINANCING ACTIVITIES Proceeds from bank and other borrowings. . . . . . . . . . . . . . . . . . Repayment of bank and other borrowings. . . . . . . . . . . . . . . . . . Interest paid . . . . . . . . . . . . . . . . . . Payment for capital reduction . . . . . Dividend paid . . . . . . . . . . . . . . . . . NET CASH FROM (USED IN) FINANCING ACTIVITIES. . . . . . NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR/PERIOD . . . . . . . . . . . . . . CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD, Represented by bank balances and cash . . . . . . . . . . . . . . . . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 403 2,110 2,030 3,414 350 14,269 — 7,768 7,767 (212,246) (207,383) (243,806) — (3,750) — (113,300) (5,453) (910) (4,988) (41,701) (34,215) 13,604 7,089 41,002 24,000 5,000 15,991 (289,113) (235,970) (197,872) 1,130,794 1,262,663 1,202,578 (816,363) (1,424,866) (1,306,173) (72,849) (66,633) (67,093) — — (309,821) — — — 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 403 2,110 2,030 3,414 350 14,269 — 7,768 7,767 (212,246) (207,383) (243,806) — (3,750) — (113,300) (5,453) (910) (4,988) (41,701) (34,215) 13,604 7,089 41,002 24,000 5,000 15,991 (289,113) (235,970) (197,872) 1,130,794 1,262,663 1,202,578 (816,363) (1,424,866) (1,306,173) (72,849) (66,633) (67,093) — — (309,821) — — — 241,582 (228,836) (480,509) (56,869) 88,931 (72,954) 182,112 125,243 214,174 125,243 214,174 141,220	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 403 3,414 — (212,246) — (113,300) (4,988) 13,604 24,000 (289,113) 1,130,794 (816,363) (72,849) — — 241,582 (56,869) 182,112 125,243	2013 RMB’000 2,110 350 7,768 (207,383) (3,750) (5,453) (41,701) 7,089 5,000 (235,970) 1,262,663 (1,424,866) (66,633) — — (228,836) 88,931 125,243 214,174	2014 RMB’000 (unaudited) 407 7,438 — (52,016) — (910) (245) 16,284 — (29,042) 580,478 (536,366) (27,239) (207,985) — 191,112 (92,825) 214,174 121,349	2015
				RMB’000 476 256 — (85,277) (5,131) — (16,285) 22,513 — (83,448) 790,680 (691,404) (23,700) (58,234) (54,388) (37,046) 50,248 141,220 191,468

— I-12 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

1. GENERAL INFORMATION

The Company was established in the People’s Republic of China (the “PRC”) on 24 June 1998 as a limited liability company under the Company Law of the PRC. On 29 December 2005, the Company was converted into a joint stock limited liability company and changed its name to 浙江福萊特玻璃鏡業股份有限公司. On 23 March 2011, the Company was renamed as 福萊特光伏玻璃集團股份有限公司 and subsequently renamed as 福萊特玻璃集團股份有限公司 on 10 October 2014. The principal activities of the Group are engaged in the manufacturing and sale of glass products.

The respective addresses of the registered office and the principal place of business of the Company are disclosed in the section “Corporation Information” of the Document. It was registered as a non-Hong Kong company under Part 16 of the Hong Kong Companies Ordinance (Cap.622) on 29 June 2015.

The Financial Information is presented in Renminbi (“RMB”), which is also the functional currency of the Company and its principal subsidiaries.

2. APPLICATION OF IFRSs

For the purpose of preparing and presenting the Financial Information, the Group has consistently applied International Accounting Standards (“IASs”), IFRSs, amendments and interpretations issued by the IASB which are effective for the accounting period beginning on 1 January 2015 throughout the Track Record Period.

At the date of this report, the IASB has issued the following new and amendments to IFRSs that are not yet effective. The Group has not early applied these new and amendments to IFRSs.

IFRS 9 . . . . . . . . . . . . . . . . . Financial Instruments[1] IFRS 15 . . . . . . . . . . . . . . . . Revenue from Contracts with Customers[1] Amendments to IFRS 11 . . . Accounting for Acquisitions of Interests in Joint operations[2] Amendments to IAS 1 . . . . . Disclosure Initiative[2] Amendments to IAS 16 and Clarification of Acceptable Methods of Depreciation and IAS 38 . . . . . . . . . . . . . . Amortisation[2] Amendments to IFRSs . . . . . Annual Improvements to IFRSs 2012-2014 Cycle[2] Amendments to IAS 16 and Agriculture: Bearer Plants[2] IAS 41 . . . . . . . . . . . . . . . Amendments to IAS 27 . . . . Equity Method in Separate Financial Statements[2]

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APPENDIX I ACCOUNTANTS’ REPORT	APPENDIX I ACCOUNTANTS’ REPORT
	Amendments to IFRS 10 and IAS 28 . . . . . . . . . . . . . . . Sale or Contribution of Assets between an Investor and its Associate or Joint Venture2 Amendments to IFRS 10, IFRS 12 and IAS 28 . . . . . Investment Entities: Applying the Consolidation Exception2 1 Effective for annual periods beginning on or after 1 January 2018 2 Effective for annual periods beginning on or after 1 January 2016

IFRS 9 Financial Instruments

IFRS 9 issued in 2009 introduces new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in 2010 to include the requirements for the classification and measurement of financial liabilities and for derecognition, and further amended in 2013 to include the new requirements for hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments.

Specifically, pursuant to IFRS 9, all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are subsequently measured at amortised cost or fair value. Under IFRS 9, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Furthermore, IFRS 9 requires certain simple debt instruments to be measured at FVTOCI when certain requirements are met. All other debt investments and equity investments are measured at their fair values at the end of subsequent reporting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

In relation to the impairment of financial assets, IFRS 9 adopts an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

The directors of the Company consider that the adoption of IFRS 9 in the future will affect the classification and measurement of the available-for-sale investments held by the Group and may affect the Group’s financial assets. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 until the Group undertakes a detailed review.

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APPENDIX I ACCOUNTANTS’ REPORT

IFRS 15 Revenue from contracts with customers

In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction contracts and the related Interpretations when it becomes effective.

The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.

Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15.

The directors of the Company anticipate that the application of IFRS 15 in the future may have a material impact on the amounts reported and disclosures made in the Group’s consolidated financial statements. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 15 until the Group performs a detailed review.

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances.

a. when the intangible asset is expected as a measure of revenue; or
b. when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated.

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APPENDIX I

ACCOUNTANTS’ REPORT

The amendments apply prospectively for annual periods begnning on or after 1 January 2016. Currently, the Group uses the straight-line method of its property, plant and equipment and unit of production method for it mining right. The directors of the Company believe that the straight — line method and production unit cost method are the most appropriate method to reflect the consumption of economic benefits inherent in the assets and accordingly, the management of the Group does not anticipate that the application of these amendments to IAS 16 and IAS 38 will have a material impact on the Financial Information.

Except as described above, the directors of the Company consider that the application of the other new IFRSs and amendments is unlikely to have a material impact on the Group’s financial position and performance as well as disclosure.

3. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared in accordance with the following accounting policies which conform with IFRSs. In addition, the Financial Information includes applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

The Financial Information has been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in the Financial Information is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 Share-Based Payment , leasing transactions that are within the scope of IAS 17 Leases , and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairments of Assets .

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APPENDIX I ACCOUNTANTS’ REPORT

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.

Basis of consolidation

The Financial Information incorporates the financial statements of the Company and its subsidiaries. Control is achieved when the Company:

has the power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year/period are included in the consolidated statements of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Investments in subsidiaries

The investments in subsidiaries are stated at cost less accumulated impairment loss, if any.

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APPENDIX I ACCOUNTANTS’ REPORT

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns and other similar allowances.

Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:

the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the Group; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Deposits and instalments received from purchasers prior to meeting the revenue recognition criteria are included in the consolidated statements of financial position under current liabilities.

Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred income in the consolidated statements of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

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APPENDIX I ACCOUNTANTS’ REPORT

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Share-based payment arrangements

Share-based payment transactions

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments granted by the shareholders at the grant date.

The fair value in respect of the equity-settled share-based payments granted by the shareholders of the Company to the Group’s employees in relation to past services is determined at the grant date, and is pushed down and expensed immediately to Group’s profit or loss with a corresponding increase in equity.

Property, plant and equipment

Property, plant and equipment including buildings held for use in the production or supply of goods or services, or for administrative purposes (other than construction in progress) are stated at cost less subsequent accumulated depreciation and accumulated impairment losses, if any.

Depreciation is recognised so as to write off the cost of assets (other than construction in progress) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Properties, plant and equipment in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Costs include professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Such properties, plant and equipment are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

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ACCOUNTANTS’ REPORT

APPENDIX I

Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated amortisation and any accumulated impairment losses. Amortisation is recognised on a straight-line basis or on units of production basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

Impairment on tangible and intangible assets and investments in subsidiaries

At the end of each reporting period, the Group and the Company reviews the carrying amounts of its tangible and intangible assets as well as investment in subsidiaries to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that they may be impaired.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or a cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

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APPENDIX I ACCOUNTANTS’ REPORT

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the relevant lease term.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchanges prevailing at the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until, such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ’profit before tax’ calculated under IFRSs because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of each reporting period.

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APPENDIX I

ACCOUNTANTS’ REPORT

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of each reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of each reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax for the year/period

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

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APPENDIX I ACCOUNTANTS’ REPORT

Research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible asset is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible asset is measured at cost less accumulated amortisation and accumulated impairment losses (see the accounting policy in respect of impairment losses on non-current assets above), if any.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a weighted average method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

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APPENDIX I ACCOUNTANTS’ REPORT

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets

Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss (“FVTPL”), available-for-sale financial asset and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

Available-for-sale financial asset

Available-for-sale financial asset (“AFS”) is non-derivatives that are either designated as available-for-sale or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at FVTPL.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost less any identified impairment losses at the end of each reporting period (see accounting policy on impairment loss on financial assets below).

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APPENDIX I ACCOUNTANTS’ REPORT

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, pledged bank deposits, and bank balances and cash) are measured at amortised cost using the effective interest method, less any impairment.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

Objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
breach of contract, such as a default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade and other receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a trade and other receivables is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

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APPENDIX I

ACCOUNTANTS’ REPORT

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities (including borrowings, trade and other payables and long-term payables for the acquisition of mining rights) are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

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APPENDIX I ACCOUNTANTS’ REPORT

4. KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in note 3, the directors of the Company are required to make judgment, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Key sources of estimation uncertainty

The following are the key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial year.

Useful lives of property, plant and equipment

The Group estimates the useful lives and related depreciation charges for its items of property, plant and equipment. This estimate is based on the management’s experience of the actual useful lives of items of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and actions of its competitors. Management will increase the depreciation charge where useful lives are less than previously estimated. The carrying amounts of property, plant and equipment of the Group as at 31 December 2012, 2013, 2014 and 31 May 2015 were approximately RMB1,784,000,000, RMB1,792,248,000, RMB1,760,574,000 and RMB1,730,055,000 respectively. The carrying amount of property, plant and equipment of the Company as at 31 December 2012, 2013, 2014 and 31 May 2015 were RMB1,287,451,000, RMB1,344,639,000, RMB1,306,408,000 and RMB1,295,784,000, respectively.

Impairment of property, plant and equipment

The Group regularly reviews whether there are any indications of impairment and recognises an impairment loss if the carrying amount of an asset is lower than its recoverable amount. The Group and the Company tests for impairment for property, plant and equipment whenever there is an indication that the asset may be impaired. The recoverable amounts have been determined based on the higher of the fair value less costs of disposal and value in use calculations. These calculations require the use of estimates, such as discount rates, future profitability and growth rates.

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APPENDIX I ACCOUNTANTS’ REPORT

Mining rights

The Group’s mining rights are carried at costs less accumulated amortisation and any accumulated impairment losses. Amortisation of mining rights is recognised using the units of production basis, being the proportion of actual production of ores over the estimated total ore reserve. The estimate of ore reserve is determined, and is used in the calculation of amortisation, the determination if there is any impairment, and the useful life of mines by the industrial experts or other judicial authorities.

The estimates of ore reserve require variable assumptions, and any change in assumptions and other factors may result in change in the estimates which would result in changes in future amortisation and impairment, if any.

Recognition of deferred tax asset

The Group recognised deferred tax asset for all deductible temporary differences to the extent that it is probable that taxable profit would be available against which the deductible temporary difference can be utilised. As at 31 December 2012, 2013, 2014 and 31 May 2015, the Group has recognised deferred tax asset of approximately RMB40,869,000, RMB35,016,000, RMB45,076,000 and RMB45,143,000 as set out in note 18, respectively. As at 31 December 2012, 2013, 2014 and 31 May 2015, the Company has recognised deferred tax asset of approximately RMB25,177,000, RMB19,744,000, RMB22,675,000 and RMB21,716,000, respectively. In cases where the actual future profits generated are less than expected, a material reversal of deferred tax assets may arise, which would be recognised in the profit or loss for the period in which such a reversal takes place.

Estimated impairment of trade and bills receivables

When there is objective evidence of impairment loss, the Group and the Company takes into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). Where the actual future cash flows are less than expected, a material impairment loss may arise. As at 31 December 2012, 2013, 2014 and 31 May 2015, the carrying amount of trade and bills receivables of the Group were RMB810,078,000, RMB1,107,605,000, RMB1,287,777,000 and RMB1,256,710,000, respectively, net of allowance for doubtful debts of RMB40,060,000, RMB24,744,000, RMB29,102,000 and RMB38,635,000, respectively. The carrying amount of trade and bills receivables of the Company were RMB656,089,000, RMB909,190,000, RMB862,843,000 and RMB940,633,000, respectively, net of allowance for doubtful debts of RMB27,336,000, RMB10,920,000, RMB14,872,000 and RMB21,355,000, respectively.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

Useful lives and impairment of prepayments and intangible assets

The Group reviews the estimated useful lives of intangible assets at the end of each reporting period. Where there are any changes in estimated useful lives, the change will be accounted for prospectively and an impact to profit and loss may arise. The directors of the Company are satisfied that there is no change in the estimated useful lives of the intangible assets from prior years.

At the end of each reporting period, the Group reviews the carrying amounts of its prepayments and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. The directors of the Company are satisfied that no impairment loss is required to recognise during the year/period. As at 31 December 2012, 2013, 2014 and 31 May 2015, the carrying amount of prepayments and intangible assets of the Group are approximately RMB234,659,000, RMB237,585,000, RMB227,787,000 and RMB215,029,000, respectively. The carrying amount of prepayments and intangible assets of the Company as at 31 December 2012, 2013, 2014 and 31 May 2015 are RMB5,164,000, RMB3,153,000, RMB1,315,000 and RMB765,000, respectively.

Estimated impairment of deposits for acquisition of land use right

As at each year end of 31 December 2012, 2013 and 2014 and as at 31 May 2015, the carrying amount of deposits for acquisition of land use right of the Group were RMB24,000,000. As stated in note 20, the Group has not entered into a land acquisition agreement with the local government. The directors of the Company are of the opinion that the Group will be able to obtain such land use right and therefore no impairment is required at 31 December 2012, 2013, 2014 and 31 May 2015, respectively.

5. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of net debt (borrowings disclosed in note 25 as offset by cash and cash equivalent) and equity attributable to owners of the Company (comprising share capital, share premium and reserves).

The directors of the Company review the capital structure on a continuous basis taking into account the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through the payment of dividends, new share issues as well as the issue of new debt or the redemption of existing debts.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

6. FINANCIAL INSTRUMENTS

Categories of financial instruments

The Group

				As at
	As	at 31 December		31 May
	2012	2013	2014	2015
	RMB’000	RMB’000	RMB’000	RMB’000
Financial assets
Trade and other receivables (including
cash and cash equivalents) . . . . . . . . .	942,985	1,378,255	1,464,486	1,477,439
Available-for-sale investment . . . . . . . . . .	4,000	4,000	4,000	4,000
	946,985	1,382,255	1,468,486	1,481,439
Financial liabilities
At amortised cost
- Trade and other payables . . . . . . . . . .	658,387	888,988	1,122,256	833,587
- Borrowings . . . . . . . . . . . . . . . . . . . .	1,165,901	1,003,698	900,103	999,379
- Long-term payables for the
acquisition of mining rights. . . . . . . .	126,651	134,175	141,650	144,573
	1,950,939	2,026,861	2,164,009	1,977,539

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I	ACCOUNTANTS’	ACCOUNTANTS’	REPORT
The Company Financial assets Trade and other receivables (including cash and cash equivalents) . . . . . . . . . . Available-for-sale investment . . . . . . . . . . Financial liabilities At amortised cost - Trade and other payables . . . . . . . . . . - Borrowings . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 739,292 1,098,123 902,472 4,000 4,000 4,000 743,292 1,102,123 906,472 474,519 650,580 766,432 836,126 744,198 642,612 1,310,645 1,394,778 1,409,044		As at 31 May
	2012 RMB’000 739,292 4,000 743,292 474,519 836,126 1,310,645	2013 RMB’000 1,098,123 4,000 1,102,123 650,580 744,198 1,394,778	2015
			RMB’000 1,046,968 4,000 1,050,968 650,133 652,962 1,303,095

Financial risk management objectives and policies

The Group’s major financial assets and liabilities include trade and other receivables, pledged bank deposits, cash and bank balances, available-for-sale investment, trade and other payables, bank borrowings and long-term payables for the acquisition of mining rights. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The management of the Group manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risk

The Group’s activities expose it primarily to the financial risks of changes in interest rate and foreign currency exchange rates. There has been no change in the Group’s exposure to these risks or the manner in which it manages and measures the risks for the Track Record Period.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

Interest rate risk

The Group is exposed to fair value interest rate risk in relation to fixed-rate borrowings (see note 25 for details of these borrowings). The Group is also exposed to cash flow interest rate risk in relation to variable-rate pledged bank deposits, bank balances and variable-rate borrowings and payables for the acquisition of mining rights. Currently, the Group does not have a specific policy to manage its interest rate risk, but the management will closely monitor interest rate exposures and consider hedging significant interest rate risk should the need arise.

Sensitivity analysis

The sensitivity analysis below has been prepared based on the exposure to interest rates for non-derivative instruments at the end of each reporting period and the stipulated change taking place at the beginning of the financial years and held constant throughout each reporting period in the case of instruments that have floating rates. A 100 basis point increase or decrease for variable-rate borrowings and 50 basis point increase or decrease for variable-rate pledged bank deposits and bank balances is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rate.

If interest rate had been of 100 basis points higher/lower for variable-rate borrowings and 50 basis points higher/lower for variable-rate pledged bank deposits and bank balances and all other variables held constant, the Group’s post-tax profit would have decreased/increased by RMB5,449,000, RMB3,327,000, RMB4,662,000 and RMB6,301,000 for the years ended 31 December 2012, 2013, 2014 and five months ended 31 May 2015, respectively. The Company’s post-tax profit would have decreased/increased by RMB5,014,000, RMB3,327,000, RMB3,710,000 and RMB3,904,000 for the years ended 31 December 2012, 2013, 2014 and five months ended 31 May 2015, respectively.

In management’s opinion, the sensitivity analysis is unrepresentative of the interest rate risk as the year/period end exposure does not reflect the exposure during the year/period.

Foreign currency risk management

The primary economic environment in which the principal subsidiary of the Company operates is the PRC and its functional currency is RMB. However, certain sales and purchases of the Group are denominated in United States Dollars (“USD”), Euro Dollars (“EUR”) and Japanese Yen (“JPY”), which are currencies other than the functional currency of the relevant group entities and expose the Group to foreign currency risk.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

The carrying amounts of the Group’s and Company’s foreign currency denominated monetary assets and monetary liabilities are as follow.

The Group

USD . . . . . EUR . . . . . JPY . . . . . Total . . . . .		Liabilities	Liabilities	31/05/2015 RMB’000 40,193 4,099 — 44,292		Assets	Assets
	31/12/2012 RMB’000 61,844 517 — 62,361	31/12/2013 RMB’000 244,283 — — 244,283	31/12/2014 RMB’000 307,462 6,348 — 313,810		31/12/2012 RMB’000 112,648 3,056 22,020 137,724	31/12/2013 RMB’000 176,946 14,009 9,424 200,379	31/12/2014 RMB’000 191,532 1,444 52,414 245,390	31/05/2015
									RMB’000 237,774 957 59,959 298,690

The Company

USD . . . . . EUR . . . . . JPY . . . . . Total . . . . .		Liabilities	Liabilities	31/05/2015 RMB’000 14,687 4,099 — 18,786		Assets	Assets
	31/12/2012 RMB’000 47,450 517 — 47,967	31/12/2013 RMB’000 243,198 — — 243,198	31/12/2014 RMB’000 223,882 4,548 — 228,430		31/12/2012 RMB’000 53,841 354 9,563 63,758	31/12/2013 RMB’000 31,176 12,657 1,018 44,851	31/12/2014 RMB’000 11,516 1,309 — 12,825	31/05/2015
									RMB’000 21,185 577 — 21,762

The Group has set up hedging policy to strike a balance between uncertainty and the risk of opportunity loss due to the growing significance of its exposures to fluctuations in foreign currency. Foreign exchange forward contracts can be used to eliminate the currency exposures. During the Track Record Period, the Group has not entered into such forward contracts but the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

Sensitivity analysis

The following table details the Group’s sensitivity to a 5% change in RMB against USD, EUR and JPY respectively. 5% represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currencies denominated monetary items and adjusts their translation at each of the end of the reporting period for a 5% change in foreign currency rates.

A positive (negative) number below indicates an increase (decrease) in profit for the year/period where the relevant foreign currencies strengthen 5% against RMB. For a 5% weakening of the relevant foreign currency against RMB, there would be an equal and opposite impact on the net profit for the year/period.

The Group

USD impact . . . . . . . . . . . . . . . . . . . . EUR impact . . . . . . . . . . . . . . . . . . . . JPY impact . . . . . . . . . . . . . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,905 (2,525) (4,348) 95 526 (184) 826 354 1,966	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,905 (2,525) (4,348) 95 526 (184) 826 354 1,966	Five months ended 31 May
	2012 RMB’000 1,905 95 826	2013 RMB’000 (2,525) 526 354	2015
			RMB’000 7,409 (118) 2,248

The Company

USD impact . . . . . . . . . . . . . . . . . . . . EUR impact . . . . . . . . . . . . . . . . . . . . JPY impact . . . . . . . . . . . . . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 240 (7,951) (7,964) (6) 475 (122) 359 38 —	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 240 (7,951) (7,964) (6) 475 (122) 359 38 —	Five months ended 31 May
	2012 RMB’000 240 (6) 359	2013 RMB’000 (7,951) 475 38	2015
			RMB’000 244 (132) —

Credit risk

As at 31 December 2012, 2013, 2014 and 31 May 2015, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties provided by the Group is arising from the carrying amount of the respective recognised financial assets as stated in the consolidated statements of financial position.

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APPENDIX I

ACCOUNTANTS’ REPORT

In order to minimise the credit risk, the management of the Company has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up actions are taken to recover overdue debts. In addition, the directors of the Company review the recoverability of each trade debt at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

As at 31 December 2012, 2013, 2014 and 31 May 2015, included in the Group’s bills receivables are commercial bills of RMB70,000,000, nil, RMB100,070,000 and RMB89,489,000. The directors of the Company are of the opinion that the credit risk of such commercial bills were insignificant as these bills were issued by selected customers, which have good credit quality with the Group.

The Group has concentration of credit risk on liquid funds which are deposited with several banks. However, the credit risk on bank balances is limited because the majority of the counterparties are state-owned banks with good reputation or banks with good credit rating assigned by international credit-rating agencies and with good reputation.

The Group has concentration of credit risk on the Group’s trade receivables. For trade receivables, most of the large customers are located in the PRC. Outstanding balance of the five largest customers represented approximately 35%, 23%, 35% and 38% of the trade receivables of the Group at 31 December 2012, 2013, 2014 and 31 May 2015, respectively. In order to minimise the credit risk, management continuously monitors the level of exposure to ensure that follow-up actions and/or corrective actions are taken promptly to lower the risk exposure or to recover overdue balances.

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

The Group had net current liabilities of RMB131,808,000 at 31 December 2012, RMB257,482,000 at 31 December 2014 and RMB115,573,000 at 31 May 2015, respectively. The Group relies on borrowings, particularly bank loans, as a significant source of liquidity. As at 31 December 2012, 2014 and 31 May 2015, the Group’s current portion of bank loans amounted to RMB750,101,000, RMB764,103,000 and RMB839,379,000, respectively. The directors of the Company closely monitors the use of cash, taking into consideration of future operation cash flows, capital expenditure and expansion plan and are of the opinion that the funds generated from operations are sufficient to pay liabilities when they fall due.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

Further, based on the past experiences, the directors of the Company are of the opinion that there is no difficulty to roll over the Group’s current bank loans when they fall due. Subsequent to 31 May 2015 and up to 30 September 2015, the Group has renewed RMB340.2 million of bank loans. In addition, as at 30 September 2015, the Group has unused banking facilities of RMB384.5 million and is in the process of obtaining further new available banking facilities. The directors of the Company consider that the liquidity risk of the Group is properly managed.

The following table details the Group’s and the Company’s remaining contractual maturity for its non-derivative financial liabilities based on the agreed repayment terms. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

Weighted average interest rate	On demand or less than 3 months	3 months to 1 year	1 year to 2 years	2 years to 5 years	Over 5 years	Total undiscounted cash flows	Total carrying amount
% N/A 6.78 6.55 N/A 6.38 6.55	RMB’000 658,387 124,761 —	RMB’000 — 672,007 —	RMB’000 — 281,402 —	RMB’000 — 173,635 100,243	RMB’000 — — 68,350	RMB’000 658,387 1,251,805 168,593 2,078,785 888,988 1,078,482 168,593 2,136,063	RMB’000 658,387 1,165,901 126,651
	783,148	672,007	281,402	273,878	68,350		1,950,939
	888,988 127,121 —	— 579,825 —	— 288,191 —	— 83,345 103,775	— — 64,818		888,988 1,003,698 134,175
	1,016,109	579,825	288,191	187,120	64,818		2,026,861

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I					ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT
As at 31 December 2014 Trade and other payables . Borrowings . . . . . . . . . Long-term payables for the acquisition of mining rights . . . . . . Total . . . . . . . . . . . . . As at 31 May 2015 Trade and other payables Borrowings . . . . . . . . . Long-term payables for the acquisition of mining rights. . . . . . . Total . . . . . . . . . . . . . The Company As at 31 December 2012 Trade and other payables . Borrowings . . . . . . . . . Total . . . . . . . . . . . . . As at 31 December 2013 Trade and other payables . Borrowings . . . . . . . . . Total . . . . . . . . . . . . . As at 31 December 2014 Trade and other payables . Borrowings . . . . . . . . . Total . . . . . . . . . . . . .	Weighted average interest rate	On demand or less than 3 months	3 months to 1 year	1 year to 2 years	2 years to 5 years	Over 5 years	Total undiscounted cash flows		Total carrying amount
	% N/A 5.96 6.15 N/A 5.70 6.15 N/A 6.39 N/A 5.94 N/A 6.14	RMB’000 1,122,256 177,207 —	RMB’000 — 609,073 —	RMB’000 — 141,938 94,272	RMB’000 — — —	RMB’000 — — 74,321		RMB’000 1,122,256 928,218 168,593 2,219,067 833,587 1,041,596 168,593 2,043,776 474,519 910,856 1,385,375 650,580 806,927 1,457,507 766,432 696,836 1,463,268	RMB’000 1,122,256 900,103 141,650
		1,299,463	609,073	236,210	—	74,321			2,164,009
		833,587 141,955 —	— 732,057 94,272	— 143,739 —	— 14,493 —	— 9,352 74,321			833,587 999,379 144,573
		975,542	826,329	143,739	14,493	83,673			1,977,539
		474,519 24,659	— 431,160	— 281,402	— 173,635	— —			474,519 836,126
		499,178	431,160	281,402	173,635	—			1,310,645
		650,580 41,033	— 394,358	— 288,191	— 83,345	— —			650,580 744,198
		691,613	394,358	288,191	83,345	—			1,394,778
		766,432 89,022	— 465,876	— 141,938	— —	— —			766,432 642,612
		855,454	465,876	141,938	—	—			1,409,044

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I					ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT
As at 31 May 2015 Trade and other payables . Borrowings . . . . . . . . . Total . . . . . . . . . . . . .	Weighted average interest rate	On demand or less than 3 months	3 months to 1 year	1 year to 2 years	2 years to 5 years	Over 5 years	Total undiscounted cash flows		Total carrying amount
	% N/A 5.81	RMB’000 650,133 63,303	RMB’000 — 473,350	RMB’000 — 142,439	RMB’000 — —	RMB’000 — —		RMB’000 650,133 679,092 1,329,225	RMB’000 650,133 652,962
		713,436	473,350	142,439	—	—			1,303,095

Fair value

The fair value of financial assets and financial liabilities measured at amortised cost is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments.

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Financial Information approximate their fair values.

7. REVENUE AND SEGMENT INFORMATION

The Group identifies operating segments on the basis of internal reports about different products of the Group that are regularly reviewed by the executive directors of the Company, the chief operating decision maker (the “CODM”) in order to allocate resources to segments and to assess their performance.

Such internal reports include five product types based on sales contract terms, namely photovoltaic glass, household glass, architectural glass, float glass and mining products. These products form the basis on which the Group reports its segment information.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

The following is an analysis of the Group’s revenue and results by operating and reportable segments for the Track Record Period:

Segment revenue Sales of photovoltaic glass . . . . . Sales of household glass. . . . . . . Sales of architectural glass . . . . . Sales of float glass . . . . . . . . . . . Sales of mining products . . . . . . Total Revenue. . . . . . . . . . . . . . . Segment results Sales of photovoltaic glass . . . . . Sales of household glass. . . . . . . Sales of architectural glass . . . . . Sales of float glass . . . . . . . . . . . Sales of mining products . . . . . . Total segment results . . . . . . . . . Other income, expenses, gains and losses . . . . . . . . . . . . . . . . Selling and marketing expenses . Administration expenses . . . . . . . Research and development expenditure . . . . . . . . . . . . . . . Finance cost . . . . . . . . . . . . . . . . Profit before tax . . . . . . . . . . . . . Income tax expense . . . . . . . . . . Profit and total comprehensive income for the year/period . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,120,450 1,438,413 2,078,373 182,218 222,578 250,875 15,273 100,770 139,197 170,616 425,298 353,846 — 224 11,015 1,488,557 2,187,283 2,833,306 288,977 396,803 768,601 31,212 54,411 62,531 3,470 33,345 33,762 (2,536) 110,371 69,475 — (69) (6,035) 321,123 594,861 928,334 (7,624) 4,122 (18,043) (57,921) (102,246) (108,845) (75,320) (93,769) (105,458) (59,894) (66,582) (129,333) (56,958) (72,343) (80,251) 63,406 264,043 486,404 (3,523) (60,428) (93,737) 59,883 203,615 392,667	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,120,450 1,438,413 2,078,373 182,218 222,578 250,875 15,273 100,770 139,197 170,616 425,298 353,846 — 224 11,015 1,488,557 2,187,283 2,833,306 288,977 396,803 768,601 31,212 54,411 62,531 3,470 33,345 33,762 (2,536) 110,371 69,475 — (69) (6,035) 321,123 594,861 928,334 (7,624) 4,122 (18,043) (57,921) (102,246) (108,845) (75,320) (93,769) (105,458) (59,894) (66,582) (129,333) (56,958) (72,343) (80,251) 63,406 264,043 486,404 (3,523) (60,428) (93,737) 59,883 203,615 392,667	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 1,120,450 182,218 15,273 170,616 — 1,488,557 288,977 31,212 3,470 (2,536) — 321,123 (7,624) (57,921) (75,320) (59,894) (56,958) 63,406 (3,523) 59,883	2013 RMB’000 1,438,413 222,578 100,770 425,298 224 2,187,283 396,803 54,411 33,345 110,371 (69) 594,861 4,122 (102,246) (93,769) (66,582) (72,343) 264,043 (60,428) 203,615	2014 RMB’000 (unaudited) 845,016 105,499 39,868 159,089 322 1,149,794 307,694 25,227 10,067 36,123 140 379,251 (15,865) (45,312) (43,472) (37,085) (35,856) 201,661 (39,583) 162,078	2015
				RMB’000 937,227 96,579 57,147 126,978 19,501 1,237,432 309,811 20,200 7,313 4,607 7,187 349,118 9,713 (46,588) (43,849) (44,377) (28,566) 195,451 (33,912) 161,539

Segment revenue reported represents revenue generated from external customers. There were no inter-segment sales during the Track Record Period.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

The accounting policies of the operating segments are the same as the Group’s accounting policies described in note 3. Segment result represents the sum of revenue less cost of sales of the relevant products. This is the measure reported to CODM for the purposes of resource allocation and performance assessment.

The CODM does not review assets and liabilities by operating segment for the purpose of resource allocation and performance assessment.

Geographical information

The Group’s operations and non-current assets are substantially located in the PRC, the place of domicile of the relevant group entities.

The analysis of the Group’s revenue from external customers attributed to the country of domicile of the relevant group entities, which is the PRC, and to other foreign countries based on the location of customers during the Track Record Period is as follows:

Place of domicile of group entities: PRC . . . . . . . . . . . . . . . . . . . . . . Other foreign countries and regions: Japan . . . . . . . . . . . . . . . . . . . . . Other countries and regions in Asia (excluding PRC and Japan) . . . . . . . . . . . . . . . . . . . Europe . . . . . . . . . . . . . . . . . . . . North America . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 800,002 1,255,370 1,533,670 111,341 174,153 453,109 363,601 461,250 503,880 150,537 214,466 250,650 49,806 63,646 60,555 13,270 18,398 31,442 1,488,557 2,187,283 2,833,306	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 800,002 1,255,370 1,533,670 111,341 174,153 453,109 363,601 461,250 503,880 150,537 214,466 250,650 49,806 63,646 60,555 13,270 18,398 31,442 1,488,557 2,187,283 2,833,306	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 800,002 111,341 363,601 150,537 49,806 13,270 1,488,557	2013 RMB’000 1,255,370 174,153 461,250 214,466 63,646 18,398 2,187,283	2014 RMB’000 (unaudited) 635,393 169,067 196,102 112,188 25,831 11,213 1,149,794	2015
				RMB’000 679,189 183,537 241,434 86,686 35,234 11,352 1,237,432

Information about major customers

For each of the years ended 31 December 2012, 2013 and 2014 and five months ended 31 May 2014, respectively, no single customer accounted for 10% or more of the Group’s revenue for the respective years/period.

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APPENDIX I ACCOUNTANTS’ REPORT

For the five months ended 31 May 2015, the revenue from one customer accounted for approximately 14% of the Group’s revenue, amounting to RMB179,322,000 and located in PRC.

8. OTHER INCOME, GAINS AND LOSSES

Other income: Government grants - assets related government grants (note 26) . . . . . . . . . . - others (note) . . . . . . . . . . . . . Interest income from bank deposits. . . . . . . . . . . . . . . . . . Other gains and losses: (Losses) gains on disposal of property, plant and equipment Impairment of property, plant and equipment . . . . . . . . . . . . . Gain on disposal of land use right . . . . . . . . . . . . . . . . . . . . Net foreign exchange (losses) gains . . . . . . . . . . . . . . . . . . . . Allowance for doubtful debts, net . . . . . . . . . . . . . . . . . . . . . Gains on disposal of scrap materials . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 10,683 12,156 12,936 9,253 990 5,513 19,936 13,146 18,449 403 2,110 2,030 20,339 15,256 20,479 (112) (3,065) 900 — — (11,600) — 13,611 — (2,630) (16,711) (12,620) (27,841) (3,680) (18,352) 6,299 5,535 3,137 (3,679) (6,824) 13 (27,963) (11,134) (38,522)	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 10,683 12,156 12,936 9,253 990 5,513 19,936 13,146 18,449 403 2,110 2,030 20,339 15,256 20,479 (112) (3,065) 900 — — (11,600) — 13,611 — (2,630) (16,711) (12,620) (27,841) (3,680) (18,352) 6,299 5,535 3,137 (3,679) (6,824) 13 (27,963) (11,134) (38,522)	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 10,683 9,253 19,936 403 20,339 (112) — — (2,630) (27,841) 6,299 (3,679) (27,963)	2013 RMB’000 12,156 990 13,146 2,110 15,256 (3,065) — 13,611 (16,711) (3,680) 5,535 (6,824) (11,134)	2014 RMB’000 (unaudited) 5,236 852 6,088 407 6,495 802 (11,053) — 1,855 (15,284) 1,254 66 (22,360)	2015
				RMB’000 5,917 7,889 13,806 476 14,282 (21) — — 4,103 (9,573) 1,005 (83) (4,569)

Note: The amounts represent incentives received from various PRC government authorities during the Track Record Period, which had no conditions imposed by the respective PRC government authorities.

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APPENDIX I ACCOUNTANTS’ REPORT

9. FINANCE COSTS

				Five months	Five months	ended
	Year	ended 31 December		31 May
	2012	2013	2014	2014	2015
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
				(unaudited)
Interest on:
Bank loans wholly repayable
within five years . . . . . . . . . .	79,633	66,309	72,775	32,933	25,643
Long-term payables for the
acquisition of mining rights
not wholly repayable within
five years . . . . . . . . . . . . . . . .	7,818	7,524	7,476	2,923		2,923
Total interest expenses . . . . . . . .	87,451	73,833	80,251	35,856	28,566
Less: amounts capitalised in the
cost of qualifying assets . . . . .	(30,493)	(1,490)	—	—		—
Total finance costs . . . . . . . . . . .	56,958	72,343	80,251	35,856	28,566

The weighted average capitalisation rates on funds borrowed are 6.94%, 5.65%, nil, nil (unaudited) and nil per annum, respectively for each of the years ended 31 December 2012, 2013, 2014, five months ended 31 May 2014 and 31 May 2015.

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APPENDIX I

ACCOUNTANTS’ REPORT

10. INCOME TAX EXPENSE

					Five months ended	Five months ended
		Year	ended 31 December		31 May
		2012	2013	2014	2014	2015
		RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
					(unaudited)
Current PRC tax:
- PRC enterprise income tax	.	14,924	55,315	104,249	46,213	36,564
- Under-provision in prior
years/period . . . . . . . . . . . . .		—	436	—	—	—
- Over-provision in prior
years/period . . . . . . . . . . . . .		(691)	—	(7)	(7)	(2,449)
		14,233	55,751	104,242	46,206	34,115
Deferred tax (credit) charge:		(10,710)	4,677	(10,505)	(6,623)	(203)
		3,523	60,428	93,737	39,583	33,912

No Hong Kong profit tax has been provided as the Group entities have no relevant assessable profits for the Track Record Period.

Subsidiaries established in the PRC are subject to PRC Enterprise Income Tax (“EIT”) at 25% during the Track Record Period except for following subsidiaries which enjoyed certain tax exemption and relief.

Zhejiang Jiafu

Effective from 2010, Zhejiang Jiafu was approved as a high-technology enterprise and is entitled to the PRC EIT at the rate of 15% and the above approval is valid for three years from 2010 to 2012. Subsequently, renewal was obtained and Zhejiang Jiafu was entitled as high-technology enterprise for another three years from 2013 to 2015.

Jiaxing Flat

According to Caishui (2012) No. 10 《財政部國家稅務總局關於公共基礎設施和環境保護節能( 節水項目企業所得稅優惠政策問題的通知》), Jiaxing Flat enjoys income tax exemption for the first three operating years and half rate reduction for the next subsequent three years. Jiaxing Flat first operating year commenced in 2014. Therefore, the EIT rate of Jiaxing Flat for the year ended 31 December 2014 and five months ended 31 May 2015 was nil.

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APPENDIX I

ACCOUNTANTS’ REPORT

The income tax expense for the Track Record Period can be reconciled to the profit before tax on the consolidated statements of profit or loss and other comprehensive income as follows:

Profit before tax . . . . . . . . . . . . . Tax at the PRC enterprise income tax rate of 25% . . . . . . Tax effect of expenses not deductible for tax purpose . . . . (Over) under provision in prior years . . . . . . . . . . . . . . . . . . . . Tax effect of tax losses not recognised as deferred tax assets . . . . . . . . . . . . . . . . . . . Effect of preferential tax rate . . . Tax effect attributable to the additional qualified tax deduction relating to research and development costs (note) . Others . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 63,406 264,043 486,404 15,852 66,011 121,601 1,477 163 597 (691) 436 (7) — 4,715 3,136 (5,702) (4,191) (20,138) (6,548) (6,706) (11,452) (865) — — 3,523 60,428 93,737	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 63,406 264,043 486,404 15,852 66,011 121,601 1,477 163 597 (691) 436 (7) — 4,715 3,136 (5,702) (4,191) (20,138) (6,548) (6,706) (11,452) (865) — — 3,523 60,428 93,737	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 63,406 15,852 1,477 (691) — (5,702) (6,548) (865) 3,523	2013 RMB’000 264,043 66,011 163 436 4,715 (4,191) (6,706) — 60,428	2014 RMB’000 (unaudited) 201,661 50,415 320 (7) 967 (9,229) (2,883) — 39,583	2015
				RMB’000 195,451 48,863 128 (2,449) 1,054 (9,310) (4,374) — 33,912

Note: According to relevant tax law, certain qualified research and development costs are eligible for an additional 50% deduction for PRC enterprise income tax.

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APPENDIX I ACCOUNTANTS’ REPORT

11. PROFIT FOR THE YEAR/PERIOD

Profit for the year/period has been arrived at after charging:

Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 133,363 180,203 200,322 2,303 2,527 10,708 4,188 4,188 4,240 139,854 186,918 215,270 27,841 3,680 18,352 126,278 149,649 180,808 4,461 8,494 10,742 130,739 158,143 191,550 177 285 416 22 66 —	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 133,363 180,203 200,322 2,303 2,527 10,708 4,188 4,188 4,240 139,854 186,918 215,270 27,841 3,680 18,352 126,278 149,649 180,808 4,461 8,494 10,742 130,739 158,143 191,550 177 285 416 22 66 —	Five months ended 31 May	Five months ended 31 May
2012 RMB’000 133,363 2,303 4,188 139,854 27,841 126,278 4,461 130,739 177 22	2013 RMB’000 180,203 2,527 4,188 186,918 3,680 149,649 8,494 158,143 285 66	2014 RMB’000 (unaudited) 81,526 1,284 1,774 84,584 15,284 73,391 4,884 78,275 10 —	2015
			RMB’000 85,841 12,758 1,780
			100,379
			9,573 81,615 5,721
			87,336
			75
			126

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

12. DIRECTORS’ AND CHIEF EXECUTIVE’S EMOLUMENTS

Details of the emoluments paid and payable to the directors, supervisors and the chief executive of the Company for the Track Record Period are as follows:

Directors’ emoluments: - Fee, salaries and other benefits . . . . . . . . . . . . . . . . - Retirement benefits scheme contribution . . . . . . . . . . . . . - Discretionary bonus (note) . . Total. . . . . . . . . . . . . . . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 2,123 2,619 2,503 79 87 78 449 289 — 2,651 2,995 2,581	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 2,123 2,619 2,503 79 87 78 449 289 — 2,651 2,995 2,581	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 2,123 79 449 2,651	2013 RMB’000 2,619 87 289 2,995	2014 RMB’000 (unaudited) 834 32 — 866	2015
				RMB’000 1,204 32 — 1,236

Note: Discretionary bonus is determined with reference to the Group’s operating results, individual performance and comparable market statistics.

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APPENDIX I

ACCOUNTANTS’ REPORT

For the year ended 31 December 2012

Executive directors: Mr. Ruan Hongliang# . . . Ms. Jiang Jinhua . . . . . . Mr. Wei Yezhong . . . . . . Mr. Shen Fuquan . . . . . . Mr. Zheng Wenrong . . . . Mr. Zhu Quanming . . . . Independent non-executive directors: Ms. Pan Yushuang . . . . . Mr. Ding Bingxing . . . . Mr. Xu Jingeng . . . . . . Mr. Li Shilong . . . . . . Supervisor: Mr. Shen Qifu. . . . . . . . Mr. Sun Lizhong . . . . . . Ms. Tao Wuping . . . . . . Total . . . . . . . . . . . . . . . .	Directors’ fee RMB’000 — — — — — — 40 40 20 20 — — — 120	Salaries and other benefits RMB’000 392 282 400 173 197 208 — — — — 203 94 54 2,003	Discretionary bonus RMB’000 121 121 31 46 26 31 — — — — 36 31 6 449	Retirement benefit scheme contributions RMB’000 11 — 11 11 11 11 — — — — 10 9 5 79		Total
						RMB’000 524 403 442 230 234 250 40 40 20 20 249 134 65 2,651

Mr. Ruan Hongliang is also the chief executive of the Company for the Track Record Period.

Mr. Xu Jingeng resigned on 28 June 2012 and Mr. Li Shilong was appointed as an independent non-executive director on the same date.

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APPENDIX I

ACCOUNTANTS’ REPORT

For the year ended 31 December 2013

Executive directors: Mr. Ruan Hongliang . . . Ms. Jiang Jinhua . . . . . . Mr. Wei Yezhong . . . . . . Mr. Shen Fuquan . . . . . . Mr. Zheng Wenrong . . . . Mr. Zhu Quanming . . . . Independent non-executive directors: Ms. Pan Yushuang . . . . . Mr. Ding Bingxing . . . . Mr. Li Shilong . . . . . . . Supervisor: Mr. Shen Qifu. . . . . . . . Mr. Sun Lizhong . . . . . . Ms. Tao Wuping . . . . . . Total . . . . . . . . . . . . . . . .	Directors’ fee RMB’000 — — — — — — 40 40 40 — — — 120	Salaries and other benefits RMB’000 598 440 460 205 206 220 — — — 214 100 56 2,499	Discretionary bonus RMB’000 41 41 26 31 26 31 — — — 51 36 6 289	Retirement benefit scheme contributions RMB’000 12 — 12 12 12 9 — — — 12 12 6 87		Total
						RMB’000 651 481 498 248 244 260 40 40 40 277 148 68 2,995

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APPENDIX I

ACCOUNTANTS’ REPORT

For the year ended 31 December 2014

Executive directors: Mr. Ruan Hongliang . . . . . . . . . . . . . . Ms. Jiang Jinhua . . . . . . . . . . . . . . . . . Mr. Wei Yezhong . . . . . . . . . . . . . . . . . Mr. Shen Fuquan . . . . . . . . . . . . . . . . . Mr. Zheng Wenrong . . . . . . . . . . . . . . . Mr. Zhu Quanming . . . . . . . . . . . . . . . Independent non-executive directors: Ms. Pan Yushuang . . . . . . . . . . . . . . . Mr. Ding Bingxing . . . . . . . . . . . . . . . Mr. Li Shilong . . . . . . . . . . . . . . . . . . Supervisor: Mr. Shen Qifu. . . . . . . . . . . . . . . . . . . Mr. Sun Lizhong . . . . . . . . . . . . . . . . . Ms. Tao Wuping . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . .	Directors’ fee RMB’000 — — — — — — 40 40 40 — — — 120	Salaries and other benefits RMB’000 520 378 388 208 212 214 — — — 275 124 64 2,383	Retirement benefit scheme contributions RMB’000 12 — 12 12 12 — — — — 12 12 6 78		Total
					RMB’000 532 378 400 220 224 214 40 40 40 287 136 70 2,581

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APPENDIX I

ACCOUNTANTS’ REPORT

For the five-month period ended 31 May 2014 (unaudited)

Executive directors: Mr. Ruan Hongliang . . . . . . . . . . . . . . Ms. Jiang Jinhua . . . . . . . . . . . . . . . . . Mr. Wei Yezhong . . . . . . . . . . . . . . . . . Mr. Shen Fuquan . . . . . . . . . . . . . . . . . Mr. Zheng Wenrong . . . . . . . . . . . . . . . Mr. Zhu Quanming . . . . . . . . . . . . . . . Independent non-executive directors: Ms. Pan Yushuang . . . . . . . . . . . . . . . Mr. Ding Bingxing . . . . . . . . . . . . . . . Mr. Li Shilong . . . . . . . . . . . . . . . . . . Supervisor: Mr. Shen Qifu. . . . . . . . . . . . . . . . . . . Mr. Sun Lizhong . . . . . . . . . . . . . . . . . Ms. Tao Wuping . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . .	Directors’ fee RMB’000 — — — — — — 17 17 17 — — — 51	Salaries and other benefits RMB’000 158 111 96 82 80 80 — — — 98 52 26 783	Retirement benefit scheme contributions RMB’000 5 — 5 5 5 — — — — 5 5 2 32		Total
					RMB’000 163 111 101 87 85 80 17 17 17 103 57 28 866

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APPENDIX I

ACCOUNTANTS’ REPORT

For the five-month period ended 31 May 2015

Executive directors: Mr. Ruan Hongliang . . . . . . . . . . . . . . Ms. Jiang Jinhua . . . . . . . . . . . . . . . . . Mr. Wei Yezhong . . . . . . . . . . . . . . . . . Mr. Shen Qifu# . . . . . . . . . . . . . . . . . . Independent non-executive directors: Ms. Pan Yushuang . . . . . . . . . . . . . . . Mr. Li Shilong . . . . . . . . . . . . . . . . . . Mr. Wu Qihong^ . . . . . . . . . . . . . . . . . Mr. Ding Bingxing&. . . . . . . . . . . . . . . Supervisor: Mr. Zheng Wenrong . . . . . . . . . . . . . . Mr. Shen Fuquan . . . . . . . . . . . . . . . . Mr. Zhu Quanming*. . . . . . . . . . . . . . . Ms. Zhang Hongming@ . . . . . . . . . . . . Mr. Meng Lizhong@ . . . . . . . . . . . . . . Mr. Sun Lizhong! . . . . . . . . . . . . . . . . Ms. Tao Wuping! . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . .	Directors’ fee RMB’000 — — — — 17 17 17 — — — — — — — — 51	Salaries and other benefits RMB’000 235 192 206 137 — — — — 92 92 95 35 69 — — 1,153	Retirement benefit scheme contributions RMB’000 5 — 5 5 — — — — 5 5 — 4 3 — — 32		Total
					RMB’000 240 192 211 142 17 17 17 — 97 97 95 39 72 — — 1,236

On 20 January 2015, Mr. Shen Fuquan, Mr. Zheng Wenrong and Mr. Zhu Quanming resigned as executive directors and were appointed as supervisors on the same date.
On 20 January 2015, Mr. Shen Qifu resigned as supervisor and was appointed as executive director on the same date.
^ On 20 January 2015, Mr. Wu Qihong was appointed as independent non-executive director.
@ On 20 January 2015, Ms. Zhang Hongming and Mr. Meng Lizhong were appointed as supervisors.
& On 20 January 2015, Mr. Ding Bingxing resigned as independent non-executive director.
! On 20 January 2015, Mr. Sun Lizhong and Ms. Tao Wuping resigned as supervisors.

During the Track Record Period, no remuneration was paid by the Group to the directors as an inducement to join or upon joining the Group or as compensation for loss of office.

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APPENDIX I ACCOUNTANTS’ REPORT

13. EMPLOYEES’ EMOLUMENTS

Of the five individuals with the highest emoluments in the Group, 3, 2, 2, 2 (unaudited) and 2 were the directors of the Company for the year ended 31 December 2012, 2013 and 2014 and five months ended 31 May 2014 and 31 May 2015, respectively. The emoluments of the remaining 2, 3, 3, 3 (unaudited) and 3 individuals during the Track Record Period were as follows:

Salaries and other benefits . . . . . Retirement benefits scheme contribution. . . . . . . . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,045 1,711 1,437 21 85 87 1,066 1,796 1,524	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,045 1,711 1,437 21 85 87 1,066 1,796 1,524	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 1,045 21 1,066	2013 RMB’000 1,711 85 1,796	2014 RMB’000 (unaudited) 530 35 565	2015
				RMB’000 637 38 675

The emoluments of the five highest paid individuals (including directors) were within the following bands:

Nil to HK$1,000,000 . . . . . .	Year ended 31 December 2012 2013 2014 5 5 5	Year ended 31 December 2012 2013 2014 5 5 5	Five months ended 31 May	Five months ended 31 May
	2012 5	2013 5	2014 (unaudited) 5	2015
				5

During the Track Record Period, no remuneration was paid by the Group to the five individuals with the highest emoluments and directors in the Group as an inducement to join or upon joining the Group or as compensation for loss of office.

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APPENDIX I ACCOUNTANTS’ REPORT

14. EARNINGS PER SHARE

The basic earnings per share for the each of the years ended 31 December 2012, 2013 and 2014 and five months ended 31 May 2014 and 31 May 2015 is calculated based on the profit for the year/period attributable to the owners of the Company and the shares in issue immediately to the issue of the Company’s shares to the public upon its Listing.

Profit for the year/period attributable to owners of the Company (RMB’000) . . . . . . . Number of ordinary shares in issue (’000) . . . . . . . . . . . . . . . Basic earnings per share (RMB cents) . . . . . . . . . . . . . . . . . . .	Year ended 31 December 2012 2013 2014 59,883 203,615 392,667 1,437,600 1,437,600 1,350,000 4.17 14.16 29.09	Year ended 31 December 2012 2013 2014 59,883 203,615 392,667 1,437,600 1,437,600 1,350,000 4.17 14.16 29.09	Five months ended 31 May	Five months ended 31 May
	2012 59,883 1,437,600 4.17	2013 203,615 1,437,600 14.16	2014 (unaudited) 162,078 1,350,000 12.01	2015
				161,539 1,350,000 11.97

There were no dilutive potential ordinary shares in issue during the Track Record Period, the amount of diluted earnings per share is the same as basic earnings per share for the Track Record Period.

Number of ordinary shares in issue has taken into account of share split with a nominal value of RMB1.00 each into 4 shares of RMB0.25 each to be completed immediately upon the Listing.

14a. DIVIDEND

During the year ended 31 December 2014, a dividend of RMB0.16 per share, equivalent to RMB54,388,000 in aggregate has been proposed by the directors of the Company and been approved by the shareholders.

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APPENDIX I ACCOUNTANTS’ REPORT

15. PROPERTY, PLANT AND EQUIPMENT

The Group

COST At 1 January 2012 . . . . . . . Additions . . . . . . . . . . . . Transfer . . . . . . . . . . . . . Disposals . . . . . . . . . . . . At 31 December 2012 . . . . . Additions . . . . . . . . . . . . Transfer . . . . . . . . . . . . . Disposals . . . . . . . . . . . . At 31 December 2013 . . . . . Additions . . . . . . . . . . . . Transfer . . . . . . . . . . . . . Disposals . . . . . . . . . . . . At 31 December 2014 . . . . . Additions . . . . . . . . . . . . Transfer . . . . . . . . . . . . . Disposals . . . . . . . . . . . . At 31 May 2015 . . . . . . . . DEPRECIATION At 1 January 2012 . . . . . . . Provided for the year . . . . . Eliminated on disposals . . . . At 31 December 2012 . . . . . Provided for the year . . . . . Eliminated on disposals . . . . At 31 December 2013 . . . . . Provided for the year . . . . . Eliminated on disposals . . . .		Buildings RMB’000 443,876 13,199 184,052 — 641,127 32,261 38,142 (9,737) 701,793 — 11,263 — 713,056 110 — (811) 712,355 50,107 27,218 — 77,325 30,389 (4,818) 102,896 32,115 —		Plant and machinery RMB’000 778,428 124,742 391,264 (7,434) 1,287,000 99,890 142,912 (26,073) 1,503,729 168,477 14,650 (20,948) 1,665,908 18,636 6,771 (6,690) 1,684,625 144,447 95,796 (4,433) 235,810 136,860 (18,625) 354,045 155,669 (7,348)		Motor vehicles RMB’000 35,510 2,311 — (794) 37,027 3,808 — (1,234) 39,601 2,235 — (8,304) 33,532 2,081 — (1,522) 34,091 16,629 6,281 (791) 22,119 5,640 (1,185) 26,574 5,032 (7,661)		Other equipment RMB’000 12,517 9,218 5,725 (665) 26,795 4,350 709 (300) 31,554 2,270 — (721) 33,103 664 — — 33,767 4,352 4,068 (143) 8,277 7,314 (298) 15,293 7,506 (428)	Construction in progress RMB’000 484,413 243,010 (581,041) — 146,382 51,557 (181,763) — 16,176 20,635 (25,913) — 10,898 34,108 (6,771) — 38,235 — — — — — — — — —		Total
											RMB’000 1,754,744 392,480 — (8,893) 2,138,331 191,866 — (37,344) 2,292,853 193,617 — (29,973) 2,456,497 55,599 — (9,023) 2,503,073 215,535 133,363 (5,367) 343,531 180,203 (24,926) 498,808 200,322 (15,437)

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I						ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT
At 31 December 2014 . . . . . Provided for the period . . . Eliminated on disposals . . . . At 31 May 2015 . . . . . . . . IMPAIRMENT At 1 January 2012 and 31 December 2012 . . . . . . . Eliminated on disposals . . . . At 31 December 2013 . . . . . Provide for the year . . . . . . Eliminated on disposals . . . . At 31 December 2014 . . . . Eliminated on disposals . . . . At 31 May 2015 . . . . . . . . CARRYING VALUES At 31 December 2012 . . . . . At 31 December 2013 . . . . . At 31 December 2014 . . . . . At 31 May 2015 . . . . . . . .		Buildings RMB’000 135,011 14,008 (605) 148,414 — — — — — — — — 563,802 598,897 578,045 563,941		Plant and machinery RMB’000 502,366 67,364 (6,072) 563,658 10,800 (9,003) 1,797 11,600 (1,167) 12,230 (614) 11,616 1,040,390 1,147,887 1,151,312 1,109,351		Motor vehicles RMB’000 23,945 1,729 (1,455) 24,219 — — — — — — — — 14,908 13,027 9,587 9,872		Other equipment RMB’000 22,371 2,740 — 25,111 — — — — — — — — 18,518 16,261 10,732 8,656	Construction in progress RMB’000 — — — — — — — — — — — — 146,382 16,176 10,898 38,235		Total
											RMB’000 683,693 85,841 (8,132) 761,402 10,800 (9,003) 1,797 11,600 (1,167) 12,230 (614) 11,616 1,784,000 1,792,248 1,760,574 1,730,055

— I-55 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I							ACCOUNTANTS’	ACCOUNTANTS’	ACCOUNTANTS’	REPORT	REPORT
The Company COST At 1 January 2012 . . . . . . . Additions . . . . . . . . . . . . Transfer . . . . . . . . . . . . . Disposals . . . . . . . . . . . . At 31 December 2012 . . . . . Additions . . . . . . . . . . . . Transfer . . . . . . . . . . . . . Disposals . . . . . . . . . . . . At 31 December 2013 . . . . . Additions . . . . . . . . . . . . Transfer . . . . . . . . . . . . . Disposals . . . . . . . . . . . . At 31 December 2014 . . . . . Additions . . . . . . . . . . . . Transfer . . . . . . . . . . . . . Disposals . . . . . . . . . . . . At 31 May 2015 . . . . . . . . DEPRECIATION At 1 January 2012 . . . . . . . Provided for the year . . . . . Eliminated on disposals . . . . At 31 December 2012 . . . . . Provided for the year . . . . . Eliminated on disposals . . . . At 31 December 2013 . . . . . Provided for the year . . . . . Eliminated on disposals . . . .		Buildings RMB’000 264,746 13,199 166,607 — 444,552 32,531 36,783 (7,929) 505,937 356 11,263 — 517,556 110 — — 517,666 27,439 17,982 — 45,421 20,431 (4,290) 61,562 22,545 —		Plant and machinery RMB’000 341,680 113,032 387,591 (10,617) 831,686 98,687 111,517 (3,553) 1,038,337 90,720 6,112 (9,980) 1,125,189 12,705 6,272 (4,194) 1,139,972 47,782 43,889 (3,469) 88,202 87,648 (580) 175,270 101,953 (1,223)		Motor vehicles RMB’000 16,549 2,293 — (351) 18,491 2,620 — (61) 21,050 1,469 — (6,938) 15,581 1,357 — (1,143) 15,795 9,139 2,403 (114) 11,428 2,488 (60) 13,856 2,881 (6,546)		Other equipment RMB’000 8,566 7,769 5,725 (637) 21,423 3,589 709 (98) 25,623 1,713 — (689) 26,647 426 — — 27,073 2,688 3,008 (90) 5,606 6,212 (33) 11,785 6,640 (410)	Construction in progress RMB’000 460,735 221,144 (559,923) — 121,956 43,218 (149,009) — 16,165 11,413 (17,375) — 10,203 32,970 (6,272) — 36,901 — — — — — — — — —		Total RMB’000 1,092,276 357,437 — (11,605) 1,438,108 180,645 — (11,641) 1,607,112 105,671 — (17,607) 1,695,176 47,568 — (5,337) 1,737,407 87,048 67,282 (3,673) 150,657 116,779 (4,963) 262,473 134,019 (8,179)

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I						ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT
At 31 December 2014 . . . . . Provided for the period . . . Eliminated on disposals . . . . At 31 May 2015 . . . . . . . . IMPAIRMENT At 1 January 2012, 31 December 2012 and 2013 . Provide for the year . . . . . . At 31 December 2014 and 31 May 2015 . . . . . . . . CARRYING VALUES At 31 December 2012 . . . . . At 31 December 2013 . . . . . At 31 December 2014 . . . . . At 31 May 2015 . . . . . . . .		Buildings RMB’000 84,107 10,058 — 94,165 — — — 399,131 444,375 433,449 423,501		Plant and machinery RMB’000 276,000 44,315 (4,063) 316,252 — 455 455 743,484 863,067 848,734 823,265		Motor vehicles RMB’000 10,191 1,256 (1,096) 10,351 — — — 7,063 7,194 5,390 5,444		Other equipment RMB’000 18,015 2,385 — 20,400 — — — 15,817 13,838 8,632 6,673	Construction in progress RMB’000 — — — — — — — 121,956 16,165 10,203 36,901		Total
											RMB’000 388,313 58,014 (5,159) 441,168 — 455 455 1,287,451 1,344,639 1,306,408 1,295,784

Certain building, plant and machineries of the Company were revalued in December 2005 when it converted into a joint stock limited liability company.

The Group pledged buildings, plant and machineries with aggregate net book values of approximately RMB188,875,000, RMB1,149,785,000, RMB1,304,849,000 and RMB1,274,193,000 as at 31 December 2012, 2013, 2014 and 31 May 2015, respectively to secure bank borrowings granted to the Group.

The Company pledged building, plant and machineries with aggregate net book values of approximately RMB23,372,000, RMB994,430,000, RMB926,565,000 and RMB892,497,000 as at 31 December 2012, 2013, 2014 and 31 May 2015, respectively to secure bank borrowings granted to the Company.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

The above items of property, plant and equipment, except for construction in progress, are depreciated on a straight-line basis after taking into account of the residual value at the following rates per annum:

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.75% Plant and machinery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5%-23.75% Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19%-23.75% Other equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19%-31.67%

During the year ended 31 December 2014, the Group reviewed the conditions of property, plant and equipment and identified that certain plant and machinery were impaired due to technical obsolescence. These assets are used in the Group’s photovoltaic glass segment. As a result, the Group recognised an impairment loss of RMB11,600,000, which has been recognised in profit or loss for the year ended 31 December 2014.

16. PREPAID LEASE PAYMENTS

The Group

Analysed for reporting purpose as: Current assets . . . . . . . . . . . . . . . . . . . . Non-current assets . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 4,188 4,239 4,209 185,570 183,157 178,947 189,758 187,396 183,156	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 4,188 4,239 4,209 185,570 183,157 178,947 189,758 187,396 183,156	As at 31 May
	2012 RMB’000 4,188 185,570 189,758	2013 RMB’000 4,239 183,157 187,396	2015
			RMB’000 4,312 182,195 186,507

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I	ACCOUNTANTS’	ACCOUNTANTS’	REPORT
The Company Analysed for reporting purpose as: Current assets . . . . . . . . . . . . . . . . . . . . Non-current assets . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 3,014 3,065 3,035 134,087 132,848 129,812 137,101 135,913 132,847		As at 31 May
	2012 RMB’000 3,014 134,087 137,101	2013 RMB’000 3,065 132,848 135,913	2015
			RMB’000 3,035 128,547 131,582

Certain land use right of the Company were carried at deemed cost which was revalued in December 2005 for the purpose of converting the Company into a joint stock limited liability company.

The prepaid lease payments are all land use rights located in the PRC held under medium-term leases of 50 years.

The Group pledged leasehold land with aggregate net book values of approximately RMB60,776,000, RMB122,814,000, RMB115,762,000 and RMB124,707,000 as at 31 December 2012, 2013, 2014 and 31 May 2015, respectively to secure bank borrowings granted to the Group.

The Company pledged leasehold land with aggregate net book values of approximately RMB8,119,000, RMB71,332,000, RMB65,452,000 and RMB69,782,000 as at 31 December 2012, 2013, 2014 and 31 May 2015, respectively to secure bank borrowings granted to the Company.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

17. PREPAYMENT AND INTANGIBLE ASSETS

The Group

COST At 1 January 2012 . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . At 31 December 2012 . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . At 31 December 2013 . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . At 31 December 2014 and 31 May 2015 . . . . . . . . . . . . . . . . . AMORTISATION At 1 January 2012 . . . . . . . . . . . . . . . Provided for the year . . . . . . . . . . . . . At 31 December 2012 . . . . . . . . . . . . Provided for the year . . . . . . . . . . . . . At 31 December 2013 . . . . . . . . . . . . Provided for the year . . . . . . . . . . . . . At 31 December 2014 . . . . . . . . . . . . Provided for the period . . . . . . . . . . . At 31 May 2015. . . . . . . . . . . . . . . . . CARRYING VALUES At 31 December 2012 . . . . . . . . . . . . At 31 December 2013 . . . . . . . . . . . . At 31 December 2014 . . . . . . . . . . . . At 31 May 2015. . . . . . . . . . . . . . . . .	Prepayment of emission rights RMB’000 (note 1) 13,640 — 13,640 — 13,640 — 13,640 3,278 2,303 5,581 2,302 7,883 2,130 10,013 627 10,640 8,059 5,757 3,627 3,000	Mining rights RMB’000 (note 2) — 226,600 226,600 5,453 232,053 910 232,963 — — — 225 225 8,578 8,803 12,131 20,934 226,600 231,828 224,160 212,029		Total
				RMB’000 13,640 226,600 240,240 5,453 245,693 910 246,603 3,278 2,303 5,581 2,527 8,108 10,708 18,816 12,758 31,574 234,659 237,585 227,787 215,029

— I-60 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT	APPENDIX I ACCOUNTANTS’ REPORT	APPENDIX I ACCOUNTANTS’ REPORT
The Company COST At 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 December 2014 and 31 May 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . AMORTISATION At 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provided for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provided for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provided for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provided for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 May 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CARRYING VALUES At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 31 May 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Prepayments of emission rights
		RMB’000 (note 1) 10,053 — 10,053 — 10,053 — 10,053 2,878 2,011 4,889 2,011 6,900 1,838 8,738 550 9,288 5,164 3,153 1,315 765

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

Notes:

1) The amount represents the payment to Jiaxing Emission Rights Reserve Trading Center (嘉興市排污權儲備交易中心), which is a government authority for the rights of emission of waste gas and water. The consideration was based on emission volume the Group acquired. Such emission rights are amortised over their useful lives using straight-line method.
2) The amount represents the right for the mining of a quartzite ore mine which is located in Anhui province, PRC. The mining rights are amortised over its estimated useful life using the units of production method. The mine is operated by Anhui Flat Materials. The local government granted the mining permit to Anhui Flat Materials for a term of 10 years from 2012 to 2022.

18. DEFERRED TAX

The following are the major deferred tax assets recognised and movements thereon during the Track Record Period:

The Group

At 1 January 2012 . Credit (charge) to profit or loss . . . At 31 December 2012 . . . . . . . . . (Charge) credit to profit or loss . . . At 31 December 2013 . . . . . . . . . Credit to profit or loss . . . . . . . . . . At 31 December 2014 . . . . . . . . . Credit (charge) to profit or loss . . . At 31 May 2015 . . .	Provision on impairments RMB’000 9,091 3,494 12,585 (6,010) 6,575 3,234 9,809 3,444 13,253		Deferred income RMB’000 19,512 4,497 24,009 (2,104) 21,905 475 22,380 (1,055) 21,325	Revaluation of properties arising from joint stock company conversion RMB’000 (7,712) 527 (7,185) 1,176 (6,009) 445 (5,564) 136 (5,428)	Tax losses RMB’000 699 (343) 356 156 512 2,456 2,968 (1,025) 1,943	Other deductible temporary differences RMB’000 1,384 2,535 3,919 2,105 6,024 3,895 9,919 (1,297) 8,622		Total
								RMB’000 22,974 10,710 33,684 (4,677) 29,007 10,505 39,512 203 39,715

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

The Company At 1 January 2012 . . Credit to profit or loss . . . . . . . . . . . At 31 December 2012 . . . . . . . . . . . (Charge) credit to profit or loss . . . . At 31 December 2013 . . . . . . . . . . . Credit to profit or loss . . . . . . . . . . . At 31 December 2014 . . . . . . . . . . . Credit (charge) to profit or loss . . . . At 31 May 2015. . . .	Provision on impairments RMB’000 4,925 2,581 7,506 (4,710) 2,796 1,063 3,859 1,621 5,480	Deferred income RMB’000 13,275 4,396 17,671 (723) 16,948 250 17,198 (962) 16,236	Revaluation of properties arising from joint stock company conversion RMB’000 (7,712) 527 (7,185) 1,176 (6,009) 445 (5,564) 136 (5,428)	Other deductible temporary differences RMB’000 — — — — — 1,618 1,618 (1,618) —	Total
					RMB’000 10,488 7,504 17,992 (4,257) 13,735 3,376 17,111 (823) 16,288

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

The Group has certain unutilised tax losses of nil, RMB18,860,000, RMB31,404,000 and RMB35,618,000 available for offset against future profits as at 31 December 2012, 31 December 2013, 31 December 2014 and 31 May 2015, respectively. No deferred tax asset has been recognised in respect of those unutilised tax losses due to the unpredictability of future profit streams. The unutilised tax losses will expire in five years for offsetting against future taxable profits.

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 — 18,860 18,860 — — 12,544 — — —	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 — 18,860 18,860 — — 12,544 — — —	As at 31 May
	2012 RMB’000 — — —	2013 RMB’000 18,860 — —	2015
			RMB’000 18,860 12,544 4,214

Other than the above amounts, at the end of each reporting period, the Group had no other significant unrecognised deferred taxation.

19. INVESTMENT IN SUBSIDIARIES

At the end of each reporting period, the amounts represent the aggregate cost of investments by the Company into each of the subsidiaries.

19a. AMOUNT DUE FROM A SUBSIDIARY/AMOUNT DUE TO SUBSIDIARIES

The amount is unsecured, non-interest bearing and repayable on demand.

20. DEPOSIT FOR ACQUISITION OF LAND USE RIGHT

At 31 December 2012, 2013, 2014 and 31 May 2015, the amount represents the deposits made by the Group to local government for the acquisition of a land use right and details are disclosed in note 29 as the contract has been cancelled.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

21. INVENTORIES

The Group

Raw materials and consumables . . . . . . . . Work in progress . . . . . . . . . . . . . . . . . . . Finished goods. . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 127,105 102,745 128,321 41,848 31,872 25,285 89,008 66,190 154,986 257,961 200,807 308,592	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 127,105 102,745 128,321 41,848 31,872 25,285 89,008 66,190 154,986 257,961 200,807 308,592	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 127,105 102,745 128,321 41,848 31,872 25,285 89,008 66,190 154,986 257,961 200,807 308,592	As at 31 May 2015 RMB’000 100,589 22,906 101,616 225,111
		2013 RMB’000 102,745 31,872 66,190 200,807	2014 RMB’000 128,321 25,285 154,986 308,592

The Company

Raw materials and consumables . . . . . . . . Work in progress . . . . . . . . . . . . . . . . . . . Finished goods. . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 84,577 62,908 64,566 27,320 18,435 14,699 40,381 39,886 95,047 152,278 121,229 174,312	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 84,577 62,908 64,566 27,320 18,435 14,699 40,381 39,886 95,047 152,278 121,229 174,312	As at 31 May
	2012 RMB’000 84,577 27,320 40,381 152,278	2013 RMB’000 62,908 18,435 39,886 121,229	2015
			RMB’000 59,361 12,071 71,811 143,243

— I-65 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

22. TRADE AND OTHER RECEIVABLES

The Group

Trade receivables . . . . . . . . . . . . . . . . . . . Less: allowance for doubtful debts. . . . . . Bills receivable . . . . . . . . . . . . . . . . . . . . Trade and bills receivables, net . . . . . . . . Advances to suppliers . . . . . . . . . . . . . . . Other taxes recoverable . . . . . . . . . . . . . . Other receivables . . . . . . . . . . . . . . . . . . . Total trade and other receivables . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 448,213 427,919 520,872 (40,060) (24,744) (29,102) 408,153 403,175 491,770 401,925 704,430 796,007 810,078 1,107,605 1,287,777 36,793 36,284 25,553 97,654 26,695 16,786 8,284 31,028 12,354 952,809 1,201,612 1,342,470	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 448,213 427,919 520,872 (40,060) (24,744) (29,102) 408,153 403,175 491,770 401,925 704,430 796,007 810,078 1,107,605 1,287,777 36,793 36,284 25,553 97,654 26,695 16,786 8,284 31,028 12,354 952,809 1,201,612 1,342,470	As at 31 May
	2012 RMB’000 448,213 (40,060) 408,153 401,925 810,078 36,793 97,654 8,284 952,809	2013 RMB’000 427,919 (24,744) 403,175 704,430 1,107,605 36,284 26,695 31,028 1,201,612	2015
			RMB’000 680,218 (38,635) 641,583 615,127 1,256,710 45,206 8,930 11,278 1,322,124

The Company

Trade receivables . . . . . . . . . . . . . . . . . . . Less: allowance for doubtful debts. . . . . . Bills receivable . . . . . . . . . . . . . . . . . . . . Trade and bills receivables, net . . . . . . . . Advances to suppliers . . . . . . . . . . . . . . . Dividend receivable from subsidiaries . . . Other taxes recoverable . . . . . . . . . . . . . Other receivables . . . . . . . . . . . . . . . . . . . Total trade and other receivables . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 388,691 376,204 363,675 (27,336) (10,920) (14,872) 361,355 365,284 348,803 294,734 543,906 514,040 656,089 909,190 862,843 29,684 22,853 65,757 — 61,460 — 86,120 19,104 — 7,142 29,015 8,836 779,035 1,041,622 937,436	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 388,691 376,204 363,675 (27,336) (10,920) (14,872) 361,355 365,284 348,803 294,734 543,906 514,040 656,089 909,190 862,843 29,684 22,853 65,757 — 61,460 — 86,120 19,104 — 7,142 29,015 8,836 779,035 1,041,622 937,436	As at 31 May
	2012 RMB’000 388,691 (27,336) 361,355 294,734 656,089 29,684 — 86,120 7,142 779,035	2013 RMB’000 376,204 (10,920) 365,284 543,906 909,190 22,853 61,460 19,104 29,015 1,041,622	2015
			RMB’000 450,678 (21,355) 429,323 511,310 940,633 64,830 — — 9,547 1,015,010

— I-66 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

The carrying amounts of the Group’s and Company’s trade and other receivables that were denominated in foreign currencies were re-translated in RMB and stated for reporting purposes as:

The Group

USD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . EUR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . JPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 97,356 137,555 166,963 2,053 13,749 738 21,572 8,406 41,672 120,981 159,710 209,373	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 97,356 137,555 166,963 2,053 13,749 738 21,572 8,406 41,672 120,981 159,710 209,373	As at 31 May
	2012 RMB’000 97,356 2,053 21,572 120,981	2013 RMB’000 137,555 13,749 8,406 159,710	2015
			RMB’000 168,375 380 40,857 209,612

The Company

USD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . EUR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . JPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 47,402 8,408 4,075 122 12,573 626 9,503 — — 57,027 20,981 4,701	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 47,402 8,408 4,075 122 12,573 626 9,503 — — 57,027 20,981 4,701	As at 31 May
	2012 RMB’000 47,402 122 9,503 57,027	2013 RMB’000 8,408 12,573 — 20,981	2015
			RMB’000 3,918 — — 3,918

Included in bills receivables of the Group are commercial bills from certain customers, amounted to RMB70,000,000, nil and RMB100,070,000 and RMB89,489,000 as at 31 December 2012, 2013, 2014 and 31 May 2015, respectively. Included in bills receivables of the Company are commercial bills amounting to RMB70,000,000, nil, nil and RMB50,000,000 as at 31 December 2012, 2013, 2014 and 31 May 2015, respectively. The maturity of the bills receivables is within 6 months from the end of each reporting period.

The Group allows a normal credit period ranged from 30 - 90 days to its trade customers. The following is an aged analysis of trade receivables net of allowance for doubtful debts presented based on the date of delivery of goods to customers which approximated the respective dates on which revenue was recognised:

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

The Group

Within 3 months . . . . . . . . . . . . . . . . . . . Over 3 months but within 1 year . . . . . . . Over 1 year but within 2 years . . . . . . . . Over 2 years but within 3 years . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 242,908 363,141 401,012 155,951 33,221 83,481 8,904 4,709 6,264 390 2,104 1,013 408,153 403,175 491,770	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 242,908 363,141 401,012 155,951 33,221 83,481 8,904 4,709 6,264 390 2,104 1,013 408,153 403,175 491,770	As at 31 May
	2012 RMB’000 242,908 155,951 8,904 390 408,153	2013 RMB’000 363,141 33,221 4,709 2,104 403,175	2015
			RMB’000 507,477 122,960 8,651 2,495 641,583

The Company

Within 3 months . . . . . . . . . . . . . . . . . . . Over 3 months but within 1 year . . . . . . . Over 1 year but within 2 years . . . . . . . . Over 2 years but within 3 years . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 258,318 341,626 285,211 100,590 20,696 59,553 2,376 1,708 3,664 71 1,254 375 361,355 365,284 348,803	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 258,318 341,626 285,211 100,590 20,696 59,553 2,376 1,708 3,664 71 1,254 375 361,355 365,284 348,803	As at 31 May
	2012 RMB’000 258,318 100,590 2,376 71 361,355	2013 RMB’000 341,626 20,696 1,708 1,254 365,284	2015
			RMB’000 333,858 87,560 7,264 641 429,323

In determining the recoverability of the trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The credit quality of the trade receivables that are neither past due nor impaired had not been changed during the Track Record Period.

The Group has not provided any allowance of doubtful debts for the following trade receivables which are past due but not impaired because the management of the Group considers that those receivables are recoverable based on the good payment record of the customers.

— I-68 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

Aging of bills and trade receivables which are past due but not impaired

The Group

Over 3 months but within 1 year . . . . . . . Over 1 year but within 2 years . . . . . . . . Over 2 years but within 3 years . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 155,951 33,221 83,481 8,904 4,709 6,264 390 2,104 1,013 165,245 40,034 90,758	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 155,951 33,221 83,481 8,904 4,709 6,264 390 2,104 1,013 165,245 40,034 90,758	As at 31 May
	2012 RMB’000 155,951 8,904 390 165,245	2013 RMB’000 33,221 4,709 2,104 40,034	2015
			RMB’000 122,960 8,651 2,495 134,106

The Company

Over 3 months but within 1 year . . . . . . . Over 1 year but within 2 years . . . . . . . . Over 2 years but within 3 years . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 100,590 20,696 59,553 2,376 1,708 3,664 71 1,254 375 103,037 23,658 63,592	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 100,590 20,696 59,553 2,376 1,708 3,664 71 1,254 375 103,037 23,658 63,592	As at 31 May
	2012 RMB’000 100,590 2,376 71 103,037	2013 RMB’000 20,696 1,708 1,254 23,658	2015
			RMB’000 87,560 7,264 641 95,465

Movement of allowance for doubtful debts on trade receivable

The Group

Opening balance . . . . . . . . . . . . . . . . . . . Provided for the year/period . . . . . . . . . . Write off for the year/period . . . . . . . . . . Closing balance . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 12,646 40,060 24,744 27,841 3,680 18,352 (427) (18,996) (13,994) 40,060 24,744 29,102	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 12,646 40,060 24,744 27,841 3,680 18,352 (427) (18,996) (13,994) 40,060 24,744 29,102	As at 31 May
	2012 RMB’000 12,646 27,841 (427) 40,060	2013 RMB’000 40,060 3,680 (18,996) 24,744	2015
			RMB’000 29,102 9,573 (40) 38,635

— I-69 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

The Company

Opening balance . . . . . . . . . . . . . . . . . . . Provided for the year/period . . . . . . . . . . Written off for the year/period . . . . . . . . . Closing balance . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 5,125 27,336 10,920 22,619 2,081 16,683 (408) (18,497) (12,731) 27,336 10,920 14,872	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 5,125 27,336 10,920 22,619 2,081 16,683 (408) (18,497) (12,731) 27,336 10,920 14,872	As at 31 May
	2012 RMB’000 5,125 22,619 (408) 27,336	2013 RMB’000 27,336 2,081 (18,497) 10,920	2015
			RMB’000 14,872 6,523 (40) 21,355

Included in the allowance for doubtful debts are individually impaired trade receivables. With reference to the historical experience including past repayment record, these receivables may not be recoverable. The Group does not hold any collateral over these balances. The Group has made full provision for all receivables aged over 3 years because historical experience is such that receivables that aged beyond 3 years are generally not recoverable.

23. BANK BALANCES AND CASH/PLEDGED BANK DEPOSITS

At the end of each reporting periods, bank balances and cash of the Group comprise cash and short term bank deposits with an original maturity of three months or less. The short-term bank deposits carry interest at market rates at 0.35% per annum as at 31 December 2012, 2013, 2014 and 31 May 2015, respectively.

At the end of each reporting periods, pledged bank deposits represent the deposits pledged to banks for securing letter of credit facilities and bank loans. The pledged bank deposits carry interest at market rates which range from 3.1% to 3.3%, 2.6% to 2.8%, 2.6% to 2.8% and 2.1% to 2.3% per annum as at 31 December 2012, 2013, 2014 and 31 May 2015, respectively.

— I-70 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

The Group’s and Company’s cash and cash equivalents that were denominated in foreign currencies were translated in RMB and stated for reporting purposes as:

The Group

USD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . EUR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . JPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 15,292 39,391 24,569 1,003 260 706 448 1,018 10,742 16,743 40,669 36,017	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 15,292 39,391 24,569 1,003 260 706 448 1,018 10,742 16,743 40,669 36,017	As at 31 May
	2012 RMB’000 15,292 1,003 448 16,743	2013 RMB’000 39,391 260 1,018 40,669	2015
			RMB’000 69,399 577 19,102 89,078

The Company

USD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . EUR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . JPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 6,439 22,769 7,441 232 84 682 60 1,018 — 6,731 23,871 8,123	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 6,439 22,769 7,441 232 84 682 60 1,018 — 6,731 23,871 8,123	As at 31 May
	2012 RMB’000 6,439 232 60 6,731	2013 RMB’000 22,769 84 1,018 23,871	2015
			RMB’000 17,267 577 — 17,844

— I-71 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

24. TRADE AND OTHER PAYABLES

The Group

Trade payables . . . . . . . . . . . . . . . . . . . . . Bills payables . . . . . . . . . . . . . . . . . . . . . Interest payable . . . . . . . . . . . . . . . . . . . . Salary and bonus payables . . . . . . . . . . . . Advanced receipts from customers . . . . . . Other taxes payable . . . . . . . . . . . . . . . . . Payables for acquisition of properties, plants and equipment . . . . . . . . . . . . . . Payables to previous shareholders (note) . Accruals and other payables. . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 466,442 758,695 809,641 23,140 — 92,009 2,091 1,767 7,450 18,125 18,787 21,554 13,282 13,700 21,674 7,860 8,763 23,566 148,497 120,494 88,258 — — 110,601 18,217 8,032 14,297 697,654 930,238 1,189,050	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 466,442 758,695 809,641 23,140 — 92,009 2,091 1,767 7,450 18,125 18,787 21,554 13,282 13,700 21,674 7,860 8,763 23,566 148,497 120,494 88,258 — — 110,601 18,217 8,032 14,297 697,654 930,238 1,189,050	As at 31 May
	2012 RMB’000 466,442 23,140 2,091 18,125 13,282 7,860 148,497 — 18,217 697,654	2013 RMB’000 758,695 — 1,767 18,787 13,700 8,763 120,494 — 8,032 930,238	2015
			RMB’000 677,875 35,200 9,393 25,435 12,716 44,095 51,454 52,367 7,298 915,833

The Company

Trade payables . . . . . . . . . . . . . . . . . . . . . Bills payables . . . . . . . . . . . . . . . . . . . . . Interest payable . . . . . . . . . . . . . . . . . . . . Salary and bonus payables . . . . . . . . . . . . Advanced receipts from customers . . . . . . Other taxes payable . . . . . . . . . . . . . . . . . Payables for acquisition of properties, plants and equipment . . . . . . . . . . . . . . Payables to previous shareholders (note) . Accruals and other payables. . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 308,594 534,238 543,008 18,220 — 34,310 1,546 1,291 6,217 8,837 12,767 15,421 7,027 11,922 47,103 2,918 2,712 9,517 133,732 108,473 61,575 — — 110,601 12,427 6,578 10,721 493,301 677,981 838,473	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 308,594 534,238 543,008 18,220 — 34,310 1,546 1,291 6,217 8,837 12,767 15,421 7,027 11,922 47,103 2,918 2,712 9,517 133,732 108,473 61,575 — — 110,601 12,427 6,578 10,721 493,301 677,981 838,473	As at 31 May
	2012 RMB’000 308,594 18,220 1,546 8,837 7,027 2,918 133,732 — 12,427 493,301	2013 RMB’000 534,238 — 1,291 12,767 11,922 2,712 108,473 — 6,578 677,981	2015
			RMB’000 519,200 20,800 7,801 19,105 42,600 26,105 44,173 52,367 5,792 737,943

— I-72 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

Note: As at 31 December 2014 and 31 May 2015, payables to previous shareholders are unsecured, interest bearing and repayable within 1 year.

Payment terms with suppliers are mainly on credit within 90 days from the time when the goods are received from suppliers. The following is an aged analysis of trade payables presented based on invoice date at the end of each reporting period:

The Group

Within 3 months . . . . . . . . . . . . . . . . . . . Over 3 months but within 180 days . . . . . Over 180 days but within 1 year . . . . . . . Over 1 year but within 2 years . . . . . . . . Over 2 years . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 456,626 752,269 804,618 5,589 356 1,691 1,650 1,176 1,513 1,920 3,266 902 657 1,628 917 466,442 758,695 809,641	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 456,626 752,269 804,618 5,589 356 1,691 1,650 1,176 1,513 1,920 3,266 902 657 1,628 917 466,442 758,695 809,641	As at 31 May
	2012 RMB’000 456,626 5,589 1,650 1,920 657 466,442	2013 RMB’000 752,269 356 1,176 3,266 1,628 758,695	2015
			RMB’000 656,197 13,238 6,160 967 1,313 677,875

The Company

Within 3 months . . . . . . . . . . . . . . . . . . . Over 3 months but within 180 days . . . . . Over 180 days but within 1 year . . . . . . . Over 1 year but within 2 years . . . . . . . . Over 2 years . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 303,709 530,231 539,625 2,196 51 1,273 753 1,066 913 1,643 2,482 657 293 408 540 308,594 534,238 543,008	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 303,709 530,231 539,625 2,196 51 1,273 753 1,066 913 1,643 2,482 657 293 408 540 308,594 534,238 543,008	As at 31 May
	2012 RMB’000 303,709 2,196 753 1,643 293 308,594	2013 RMB’000 530,231 51 1,066 2,482 408 534,238	2015
			RMB’000 505,203 12,093 449 838 617 519,200

— I-73 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

The Group’s and Company’s trade and other payables that were denominated in USD and EUR, the foreign currencies of the relevant group entities, were re-translated in RMB and stated for reporting purposes as:

The Group USD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . EUR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Company USD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . EUR. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,413 1,085 2,359 517 — 6,348 1,930 1,085 8,707 294 — 1,270 517 — 4,548 811 — 5,818	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,413 1,085 2,359 517 — 6,348 1,930 1,085 8,707 294 — 1,270 517 — 4,548 811 — 5,818	As at 31 May
	2012 RMB’000 1,413 517 1,930 294 517 811	2013 RMB’000 1,085 — 1,085 — — —	2015
			RMB’000 1,089 4,099 5,188 — 4,099 4,099

25. BORROWINGS

The Group

Secured bank and other loans (Note) . . . . Unsecured bank loans . . . . . . . . . . . . . . . Fixed-rate borrowings . . . . . . . . . . . . . . . Variable-rate borrowings . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,136,901 931,558 852,413 29,000 72,140 47,690 1,165,901 1,003,698 900,103 380,231 432,698 207,190 785,670 571,000 692,913 1,165,901 1,003,698 900,103	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 1,136,901 931,558 852,413 29,000 72,140 47,690 1,165,901 1,003,698 900,103 380,231 432,698 207,190 785,670 571,000 692,913 1,165,901 1,003,698 900,103	As at 31 May
	2012 RMB’000 1,136,901 29,000 1,165,901 380,231 785,670 1,165,901	2013 RMB’000 931,558 72,140 1,003,698 432,698 571,000 1,003,698	2015
			RMB’000 999,379 — 999,379 87,075 912,304 999,379

— I-74 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

Note: At the end of each reporting period, the above Group’s bank and other borrowings are secured by (i) the Group’s land use right with aggregate carrying values of approximately RMB60,776,000, RMB122,814,000, RMB115,762,000 and RMB124,707,000, respectively, (ii) the Group’s buildings, plant and machineries with aggregate carrying values of RMB188,875,000, RMB1,149,785,000, RMB1,304,849,000 and RMB1,274,193,000, respectively and (iii) note receivables with carrying values of approximately RMB16,000,000, nil, RMB20,000,000 and RMB44,485,000, respectively. As at 31 December 2012, 2013, 2014 and 31 May 2015, certain bank borrowings of approximately RMB975,438,000, RMB708,000,000, RMB644,737,000 and RMB687,700,000 were guaranteed by Mr. Ruan Hongliang and Ms. Jiang Jinhua, who are both directors of the Company.

The guarantees of RMB647,700,000 provided by Mr. Ruan Hongliang and Ms. Jiang Jinhua have been released as at 3 June 2015, and the rest has been released as at 3 August 2015.

During the five months ended 31 May 2015, Mr. Ruan Hongliang lent to the Group in the form of an entrusted loans an aggregate of RMB31,000,000, and RMB2,000,000 had been repaid by the Group during the period. At 31 May 2015, included in secured bank and other borrowings is RMB29,000,000 which is in the form of entrusted loan with source of funds provided by Mr. Ruan Hongliang. The entrusted loan bears interest at 5.88% per annum and has been fully repaid by end of October 2015. There was no such balance as at 31 December 2012, 31 December 2013, and 31 December 2014.

Carrying amount repayable: Within one year . . . . . . . . . . . . . . . . . . More than one year, but not exceeding two years . . . . . . . . . . . . . . . . . . . . . Over two years but not more than 5 years . . . . . . . . . . . . . . . . . . . . . . . . . More than five years . . . . . . . . . . . . . . Less: Amounts shown under current liabilities . . . . . . . . . . . . . . . . . . . . . . . Amounts shown under non-current liabilities . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 750,101 653,698 764,103 255,800 270,000 136,000 160,000 80,000 — — — — 750,101 653,698 764,103 415,800 350,000 136,000	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 750,101 653,698 764,103 255,800 270,000 136,000 160,000 80,000 — — — — 750,101 653,698 764,103 415,800 350,000 136,000	As at 31 May
	2012 RMB’000 750,101 255,800 160,000 — 750,101 415,800	2013 RMB’000 653,698 270,000 80,000 — 653,698 350,000	2015
			RMB’000 839,379 140,000 11,000 9,000 839,379 160,000

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

The ranges of effective interest rates per annum (which are also equal to contracted interest rates) on the Group’s borrowings are as follows:

Effective interest rate: Fixed-rate borrowings . . . Variable-rate borrowings .		As	As	at 31 December	at 31 December	2014 5.88%-6.30% 4.20%-6.46%		As at 31 May
		2012		2013 5.00%-6.36% 2.71%-6.60%				2015
		5.04%-6.00% 2.30%-6.98%						5.00%-5.20% 0.68%-6.50%

The Company

Secured bank and other loans (Note) . . . . Unsecured bank loans . . . . . . . . . . . . . . . Fixed-rate borrowings . . . . . . . . . . . . . . . Variable-rate borrowings . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 833,126 692,058 629,422 3,000 52,140 13,190 836,126 744,198 642,612 125,956 213,198 128,190 710,170 531,000 514,422 836,126 744,198 642,612	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 833,126 692,058 629,422 3,000 52,140 13,190 836,126 744,198 642,612 125,956 213,198 128,190 710,170 531,000 514,422 836,126 744,198 642,612	As at 31 May
	2012 RMB’000 833,126 3,000 836,126 125,956 710,170 836,126	2013 RMB’000 692,058 52,140 744,198 213,198 531,000 744,198	2015
			RMB’000 652,962 — 652,962 79,275 573,687 652,962

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

ACCOUNTANTS’ REPORT


APPENDIX I	ACCOUNTANTS’		REPORT
Carrying amount repayable: Within one year . . . . . . . . . . . . . . . . . . More than one year, but not exceeding two years . . . . . . . . . . . . . . . . . . . . . Over two years but not more than 5 years . . . . . . . . . . . . . . . . . . . . . . . . . Less: Amounts shown under current liabilities . . . . . . . . . . . . . . . . . . . . . . . Amount shown under non-current liabilities . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 420,326 394,198 506,612 255,800 270,000 136,000 160,000 80,000 — 420,326 394,198 506,612 415,800 350,000 136,000		As at 31 May
	2012 RMB’000 420,326 255,800 160,000 420,326 415,800	2013 RMB’000 394,198 270,000 80,000 394,198 350,000	2015
			RMB’000 512,962 140,000 — 512,962 140,000

Note:

At the end of each reporting period, the above Company’s bank and other borrowings are secured by (i) the Company’s prepaid land use right with aggregate carrying values of approximately RMB8,119,000, RMB71,332,000, RMB65,452,000 and RMB69,782,000, respectively, (ii) the Company’s buildings, plant and machineries with aggregate carrying values of approximately RMB23,372,000, RMB994,430,000, RMB926,565,000 and RMB892,497,000, respectively, (iii) certain subsidiaries’ prepaid lease payment of land use right and buildings, plant and machineries with aggregate carrying values of approximately RMB29,063,000, RMB26,091,000, RMB267,661,000 and RMB264,448,000, respectively and (iv) note receivables with carrying values of approximately RMB16,000,000, nil, RMB14,000,000 and RMB36,685,000, respectively.

As at 31 December 2012, 2013, 2014 and 31 May 2015, certain bank borrowings of the Company amounting to approximately RMB726,938,000, RMB541,000,000, RMB515,737,000 and RMB475,000,000 were guaranteed by Mr. Ruan Hongliang and Ms. Jiang Jinhua. The guarantees of RMB435,000,000 have been released as at 3 June 2015, and the rest has been released as at 3 August 2015.

During the five months ended 31 May 2015, Mr. Ruan Hongliang lent to the Group in the form of an entrusted loans an aggregate of RMB31,000,000, and RMB2,000,000 had been repaid by the Group during the period. At 31 May 2015, included in secured bank and other borrowings is RMB 29,000,000 which is in the form of entrusted loan with source of funds provided by Mr. Ruan Hongliang. The entrusted loan bears interest at 5.88% per annum and has been fully repaid by end of October 2015. There was no such balance as at 31 December 2012, 31 December 2013, and 31 December 2014.

25a. LONG-TERM PAYABLES FOR THE ACQUISITION OF MINING RIGHTS

At the end of each reporting period, the long-term payables for the acquisition of mining rights was unsecured, bearing variable interest rate with reference to lending interest rates announced by the People’s Bank of China. At 31 May 2015, RMB87,923,000 of the long-term payables will be repaid in April 2016 and has been reclassified as current liabilities and remaining portion will be repaid in 2021.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I

ACCOUNTANTS’ REPORT

26. DEFERRED REVENUE

The Group

Arising from asset-related government grants Within one year . . . . . . . . . . . . . . . . . . . Over one year . . . . . . . . . . . . . . . . . . . . . COST At 1 January 2012 . . . . . . . . . . . . . . . . . . . Government grants received . . . . . . . . . . . . Released to profit or loss (note 8) . . . . . . . At 31 December 2012 . . . . . . . . . . . . . . . . Government grants received . . . . . . . . . . . . Released to profit or loss (note 8) . . . . . . . At 31 December 2013 . . . . . . . . . . . . . . . . Government grants received . . . . . . . . . . . . Released to profit or loss (note 8) . . . . . . . At 31 December 2014 . . . . . . . . . . . . . . . . Released to profit or loss (note 8) . . . . . . . At 31 May 2015. . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 12,156 12,936 14,536 86,035 78,099 79,554 98,191 91,035 94,090 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 12,156 12,936 14,536 86,035 78,099 79,554 98,191 91,035 94,090 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As at 31 May
	2012 RMB’000 12,156 86,035 98,191 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2013 RMB’000 12,936 78,099 91,035 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2015
			RMB’000 14,201 73,972 88,173 RMB’000 84,874 24,000 (10,683) 98,191 5,000 (12,156) 91,035 15,991 (12,936) 94,090 (5,917) 88,173

The Group received government subsidies approximately RMB24,000,000, RMB5,000,000 and RMB15,991,000 for each of the years ended 31 December 2012, 2013 and 2014 for the technological upgrade of certain properties, plant and equipment and photovoltaic glass related technology. The amounts are treated as deferred revenue and will be released to profit or loss in line with the estimated useful lives of related property, plant and equipment and upon future expenditure to be incurred.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I	ACCOUNTANTS’	ACCOUNTANTS’	REPORT
The Company Arising from asset-related government grants Within one year . . . . . . . . . . . . . . . . . . . Over one year . . . . . . . . . . . . . . . . . . . . . COST At 1 January 2012 . . . . . . . . . . . . . . . . . . . Government grants received . . . . . . . . . . . . Released to profit or loss . . . . . . . . . . . . . . At 31 December 2012 . . . . . . . . . . . . . . . . Government grants received . . . . . . . . . . . . Released to profit or loss . . . . . . . . . . . . . . At 31 December 2013 . . . . . . . . . . . . . . . . Government grants received . . . . . . . . . . . . Released to profit or loss . . . . . . . . . . . . . . At 31 December 2014 . . . . . . . . . . . . . . . . Released to profit or loss . . . . . . . . . . . . . . At 31 May 2015. . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 7,890 8,300 9,230 62,793 59,493 59,563 70,683 67,793 68,793 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		As at 31 May
	2012 RMB’000 7,890 62,793 70,683 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2013 RMB’000 8,300 59,493 67,793 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2015
			RMB’000 9,230 55,717 64,947 RMB’000 53,100 24,000 (6,417) 70,683 5,000 (7,890) 67,793 9,300 (8,300) 68,793 (3,846) 64,947

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

27. SHARE CAPITAL

The Company

Share capital At beginning of year/period . . . . . . . . . . . Reduction of capital on 1 January 2014 . . At end of year/period. . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 359,400 359,400 359,400 — — (21,900) 359,400 359,400 337,500	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 359,400 359,400 359,400 — — (21,900) 359,400 359,400 337,500	As at 31 May
	2012 RMB’000 359,400 — 359,400	2013 RMB’000 359,400 — 359,400	2015
			RMB’000 337,500 — 337,500

The Company was established in the PRC on 24 June 1998 as a limited liability company and was converted into a joint stock limited liability company on 29 December 2005 (the “Joint Stock Conversion”). On the Joint Stock Conversion, the Company’s share capital was RMB359,400,000 divided into 359,400,000 shares of RMB1.0 each.

On 1 January 2014, certain shareholders of the Company entered into agreement with the Company to reduce share capital by 21,900,000 shares of RMB1.0 each.

Pursuant to a shareholders’ resolution dated 18 May 2015, immediately upon the Listing, the shares with a nominal value of RMB1.00 each in the registered share capital of the Company will be split into 4 shares of RMB0.25 each.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

28. RESERVES

The Company

At 1 January 2012 . . . . . . . . . Total comprehensive income for the year . . . . . . . . . . . . . . . Transfer. . . . . . . . . . . . . . . . . Balance at 31 December 2012. . Total comprehensive income for the year . . . . . . . . . . . . . . . Transfer. . . . . . . . . . . . . . . . . Balance at 31 December 2013. . Total comprehensive income for the year . . . . . . . . . . . . . . . Capital reduction . . . . . . . . . . Transfer. . . . . . . . . . . . . . . . . Dividends . . . . . . . . . . . . . . . Balance at 31 December 2014. . Total comprehensive income for the period. . . . . . . . . . . . . . Balance at 31 May 2015 . . . . .	Share premium Equity-settled employee benefits reserve RMB’000 RMB’000 126,132 3,277 — — — — 126,132 3,277 — — — — 126,132 3,277 — — (126,132) — — — — — — 3,277 — — — 3,277	Statutory surplus reserve RMB’000 67,199 — 34,393 101,592 — 19,948 121,540 — — 24,836 — 146,376 — 146,376	Retained earnings RMB’000 467,060 348,292 (34,393) 780,959 225,896 (19,948) 986,907 203,502 (272,390) (24,836) (54,388) 838,795 68,250 907,045	Total
				RMB’000 663,668 348,292 — 1,011,960 225,896 — 1,237,856 203,502 (398,522) — (54,388) 988,448 68,250 1,056,898

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

Statutory surplus reserve

According to the Articles of Association of the Company and its subsidiaries established in the PRC, these PRC entities are required to transfer 10% of its net profit as determined in accordance with the Company Law of the PRC to its statutory surplus reserve until the reserve balance reaches 50% of the share capital. The transfer to this reserve must be made before distribution of a dividend to shareholders. This reserve fund can be utilised in setting off accumulated losses or increasing capital and is non-distributable other than in liquidation.

Equity-settled employed benefits reserve

The amounts represent the reserve in respect of the equity-settled share based payments granted to certain employees.

29. CAPITAL COMMITMENTS

Capital expenditure in respect of acquisition of property, plant and equipment — Contracted but not provided for . . . . . .	At 31/12/2012 RMB’000 207,152	At 31/12/2013 RMB’000 103,721	At 31/12/2014 RMB’000 65,430	At 31/05/2015
				RMB’000 56,982

In addition, the Group entered into a project investment agreement with a local government in Anhui Province in August 2010, pursuant to which the Group commits to purchase a land use right for establishing certain glass production lines. The Group has paid a deposit of RMB24 million in 2011 for acquiring the land use right of which the total cost is estimated to be not less than RMB67 million. Subsequently on 28 July 2015, the Group entered into a supplementary agreement with the local government to cancel the above mentioned project investment agreement signed in 2010. According to the supplementary agreement, the deposit of RMB24 million will be used for the acquisition of a land use right for another project. Up to the date of this report, the Group is still in the process of finalising the details with the local government, and no land use right acquisition agreement has been entered into yet.

30. RETIREMENT BENEFIT PLANS

The Group’s full-time employees in the PRC are covered by a government-sponsored defined contribution pension scheme, and are entitled to a monthly pension from their retirement dates. The PRC Government is responsible for the pension liability to these retired employees. The Group is required to make annual contributions to the retirement plan at an average rate of 20% of employees’ salaries, which are charged as an expense when the employees have rendered services entitling them to the contributions and the contributions are due.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

As at 31 December 2012, 2013, 2014 and 31 May 2015, the contributions due in respect of the year/period that had not been paid over were nil, nil, RM683,000 and RMB734,000 respectively.

31. CONTINGENT LIABILITIES

At the end of each reporting period, the Company and the Group had no significant contingent liability.

32. OPERATING LEASES COMMITMENTS

At the end of each reporting periods, the Group had outstanding commitments payable under non-cancellable, fixed rate operating leases in respect of office premises which fall due as follows:

Within one year . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 66 — 36	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 66 — 36	As at 31 May
	2012 RMB’000 66	2013 RMB’000 —	2015
			RMB’000 36

33. RELATED PARTY TRANSACTIONS

(1) Related party transactions

During the Track Record Period, in addition to those disclosed in Note 25 the Group had the following related party transactions:

Purchase of raw materials from 嘉興市譽誠商貿有限公司 Jiaxing Yucheng Commerce and Trading Co., Ltd. (note) . . . . . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 — — 76,006	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 — — 76,006	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 —	2013 RMB’000 —	2014 RMB’000 (unaudited) 41,811	2015
				RMB’000 —

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

The following balances were outstanding at the end of each reporting periods:

Trade Payables 嘉興市譽誠商貿有限公司Jiaxing Yucheng Commerce and Trading Co., Ltd. (note) . . . . . . . . . . . . . . . . . . . . . .	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 — — 857	As at 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 — — 857	As at 31 May
	2012 RMB’000 —	2013 RMB’000 —	2015
			RMB’000 —

Note: 嘉興市譽誠商貿有限公司 Jiaxing Yucheng Commerce and Trading Co., Ltd. was wholly owned by Ms. Jiang Jin Hua, one of the executive directors of the Company and the spouse of Mr. Ruan Hongliang.

(2) Compensation of key management personnel

The remuneration of directors and other members of key management during the Track Record Period were as follows:

Salaries and allowances . . . .	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 3,672 4,092 3,394	Year ended 31 December 2012 2013 2014 RMB’000 RMB’000 RMB’000 3,672 4,092 3,394	Five months ended 31 May	Five months ended 31 May
	2012 RMB’000 3,672	2013 RMB’000 4,092	2014 RMB’000 (unaudited) 1,168	2015
				RMB’000 1,741

Key management represents the directors and other senior management personnel disclosed in the Document. The remuneration of key management is determined with reference to the performance of the individuals and market trends.

II. DIRECTORS’ REMUNERATION

Under the arrangements presently in force, the aggregate remuneration payable to the Directors and supervisors for the year ending 31 December 2015, excluding discretionary bonus is estimated to be approximately RMB3,231,000.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX I ACCOUNTANTS’ REPORT

III. EVENTS AFTER THE REPORTING PERIOD

Pursuant to a shareholders’ resolution dated 30 September 2015, the Company declared dividends of RMB250 million. The Company withheld RMB50 million from the dividend for withholding tax and paid RMB200 million net of tax to the shareholders. The directors of the Company have represented to us that the withholding tax will be settled in December 2015.

IV. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Group, the Company or any of the companies comprising the Group in respect of any period subsequent to 31 May 2015.

Yours faithfully, [Deloitte Touche Tohmatsu] Certified Public Accountants Hong Kong

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

The information set forth in this appendix does not form part of the accountants’ report on the financial information of the Group for the three years ended 31 December 2014 and the five months ended 31 May 2015 prepared by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, as set forth in Appendix I to this document. For the purpose of this Appendix II, Flat Glass Group Co., Ltd. is referred to as the “Company” and, together with its subsidiaries, the “Group”.

(A) UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP ATTRIBUTABLE TO THE OWNERS OF THE COMPANY

The following unaudited pro forma financial information prepared in accordance with paragraph 29 of Chapter 4 of the Listing Rules is for illustrative purposes only, and is set out here to provide investors with further information about how the proposed [REDACTED] might have affected the consolidated net tangible assets of the Group attributable to the owners of the Company after completion of the [REDACTED] as if the [REDACTED] had taken place on 31 May 2015. Although reasonable care has been exercised in preparing the said information, prospective investors who read the information should bear in mind that these figures are inherently subject to adjustments and may not give a true picture of the Group’s financial position following the [REDACTED] or at any future dates.

The following unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company have been prepared based on the audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 31 May 2015 set out in the Accountants’ Report, the text of which is included in Appendix I to this document, and is adjusted as described below.

Based on [REDACTED] of HK$[REDACTED] for each [REDACTED] . . . . . . . . . . . . . . Based on [REDACTED] of HK$[REDACTED] for each [REDACTED] . . . . . . . . . . . . . .	Audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 31 May 2015 Estimated net proceeds from the [REDACTED] RMB’000 RMB’000 (Note 1) (Note 2) [REDACTED] [REDACTED] [REDACTED] [REDACTED]	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owner of the Company Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owner of the Company per share RMB’000 RMB HK$ (Note 3) (Note 4) [REDACTED][REDACTED][REDACTED] [REDACTED][REDACTED][REDACTED]	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owner of the Company per share

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

Notes:

(1) The audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 31 May 2015 is based on consolidated net assets of the Group of RMB1,819,073,000 and adjusted for intangible assets of RMB212,029,000 of the Group as extracted from the Accountants’ Report set out in Appendix I to the document.
(2) The estimated net proceeds from the [REDACTED] are based on [REDACTED] H shares to be issued under the [REDACTED] and the [REDACTED] of HK$[REDACTED] per share or HK$[REDACTED] per share after deduction of the underwriting fees and other related expenses payable by the Company, and do not take into account any shares which may be issued upon the exercise of the [REDACTED] for the [REDACTED].
(3) The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company per share is calculated after the adjustments referred to in note (2) above and on the basis of [REDACTED] shares issued and outstanding following the completion of the one to four share split as detailed in appendix VII and the [REDACTED] and assuming that the [REDACTED] for the [REDACTED] is not exercised. The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company per share does not take into account of proposed dividends of RMB250,000,000 declared on September 30, 2015 (“Proposed Dividends”). Had this Proposed Dividends been taken into account, the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners of the Company per share will be further adjusted to RMB[REDACTED] (equivalent to HK$[REDACTED], based on the indicative [REDACTED] of HK$[REDACTED]), or RMB[REDACTED] (equivalent to HK$[REDACTED], based on the indicative [REDACTED] of HK$[REDACTED]).
(4) The translation between Renminbi and Hong Kong dollar has been made at the rate of RMB0.8188 to HK$1.00, PBOC rate prevailing on 6 November 2015. No representation is made that the Hong Kong dollar amounts have been, could have been or could be converted to Renminbi, or vice versa, at that rate or at any other rates or at all.
(5) Except for the one to four Share Split as detailed in note (3) above, no adjustments have been made to the unaudited pro forma adjusted consolidated net tangible assets attributable to the owners of the Company to reflect any trading results or other transactions which the Group entered into subsequent to 31 May 2015.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report received from the Company’s reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong in respect of the Group’s unaudited pro forma financial information for the purpose of incorporation in this document.

(B) INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

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TO THE DIRECTORS OF FLAT GLASS GROUP CO., LTD.

We have completed our assurance engagement to report on the compilation of pro forma financial information of Flat Glass Group Co., Ltd. (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The pro forma financial information consists of the pro forma statement of adjusted net tangible assets as at 31 May 2015 and related notes as set out on pages 1 to 2 of Appendix II to the document issued by the Company dated [●] (the “Document”). The applicable criteria on the basis of which the Directors have compiled the pro forma financial information are described on pages 1 to 2 of Appendix II to the Document.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed [REDACTED] on the Group’s financial position as at 31 May 2015 as if the proposed [REDACTED] had taken place at 31 May 2015. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s financial information for the three years ended 31 December 2014 and five months ended 31 May 2015, on which an accountants’ report set out in Appendix I to the Document has been published.

Directors’ Responsibilities for the Pro Forma Financial Information

The Directors are responsible for compiling the pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Document issued by the HKICPA. This standard requires that the reporting accountants comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the pro forma financial information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information.

The purpose of pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 31 May 2015 would have been as presented.

A reasonable assurance engagement to report on whether the pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

The related pro forma adjustments give appropriate effect to those criteria; and
The pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

Opinion

In our opinion:

(a) the pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong, [DATE]

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

This appendix sets out the executive summary of the Independent Technical Report.

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1 EXECUTIVE SUMMARY

This report is a technical review of the Mineral Resources of the Lingshan-Mujishan No 7 Quartz Mine owned by 安徽福萊特光伏材料有限公司 (Anhui Flat Solar Materials Co., Ltd.) (“The Company”).

At the request of Ms Michelle Ruan of Flat Glass Group Co., Ltd., Mining Associates Limited (“MA”) was commissioned on 26 February 2015 to prepare a Competent Person’s Report on the Lingshan- Mujishan No 7 Quartz Mine to the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves standards (“JORC 2012”).

Four weeks were spent on data collection, analysis, site visits, technical work and preparation of this report. A full resource estimation process was undertaken by MA.

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Regional Location Map Source: Google Maps

Project location in North-western corner of map (marked with blue flag)

The Company’s quartz mining licence is number 7 of 18 adjacent mineral licences in the Lingshan- Mujishan Glass Use Quartz Deposit in Fengyuan County, Anhui Province (“ML”). The area has been well explored since the 1950’s with extensive previous production from adjacent tenements. A detailed geology and resource estimation report was prepared in 2010. A preliminary mine design report was prepared by Sinosteel in 2012. These reports, associated maps and data form the basis for the Companies development plans and were the basis for MA’s review of the project, along with further data collected during the site visit.

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

The quartzite to be mined is a bulk industrial mineral. All material defined in an area that covers about 2/3 of the mining licence and down to the base of the mining licence (80m above sea level) is potentially economic. The quartzite is very pure, originally sedimentary in origin, but has undergone high grade metamorphism since deposition. The rock is Mid-Proterozoic in age belonging to the Upper member of the Baiyunshan Unit of the Fengyang Group. Impurities are minor amounts of iron and alumina.

Existing Resource Statements

The June 2010 report by the China Construction Materials Industry Geological Survey Corps of Anhui resource estimate report titled: “Anhui Province Fengyuan County, Lingshan-Mujishan mine district. Detailed Geological Report on the 7[th] Section of the Glass Use Quartzite Deposit” is fully compliant and registered with the Chinese Ministry of Land and Resources (“MLR”). The resources were estimated using 8 drill holes (1,352m of drill core) which include 2 drill holes inside the ML (293.62 m of core) and 7,845 cubic meters of trenching (991 m[3] inside the ML). 930 outcrop samples (62 in the ML), 461 drill core samples (104 inside the ML) were used for the resource estimate. In addition 93 density measurements (11 in the ML) were used for bulk density measurements. The total tonnage of glass use quartzite inside the ML was: 18.167 Million tonnes “Mt”, and the average of major chemical composition was: 98.76% silicon dioxide (SiO2), 0.312% aluminium oxide (Al2O3), 0.074% iron oxide (Fe2O3), 0.0109% titanium dioxide (TiO2) and 0.0007% chromium oxide (Cr2O3). No mine or process plant recovery factors have been applied to these resource estimates. Appropriate quality controls and quality assurance/quality control procedures were used. Check samples collected during the site visit by MA have been assayed and returned values of SiO2, Al2O3 and Fe2O3 within the range of values in the 2010 resource estimation results and the 2012 preliminary mine design report.

The total tonnage of planned usable material inside the ML as determined by Sinosteel in their November 2012 study report was 13.572 Mt.

The total tonnage mined and sold up to 31 December 2014 inside the ML as reported by the Company in the 6 January 2015 update report was 664,300 tonnes “t”. The total tonnage mined and sold from 1 January 2015 to 31 May 2015 inside the ML as reported by the Company on a monthly basis is 947,000 t. This approximately matches the government Land and Resources Bureau survey of 918,100 tonnes mined in the first half of 2015. The small difference is due to the January 2015 material being sold from December 2014 stockpiles and to the small difference in the date of the start of the survey period: 22 December 2014 for the government survey verse 31 December 2014 for the company records. The government Land and Resources Bureau report covers the period 22 December 2014 to 9 June 2015 (and refers to this period in the report as “the first half of 2015”). The Company has stated that no blasting occurred (and therefore no mining) during the period 1 to 9 June 2015.

MA was supplied the topography, drill and trench assays and undertook a full 3D check resource estimate using Ordinary Kriging methods for SiO2, Al2O3 and Fe2O3. These were in close agreement with and confirmed the Sinosteel 2012 resource estimate which allow for the JORC 2012 “reasonable prospects of eventual economic extraction” test to be applied. MA also tested confidence levels and confirmed the China 332 resource category as Indicated and 333 as Inferred was reasonable for this deposit under JORC 2012.

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

Mining Associates can confirm that the Total Mineral Resource Estimate compliant with JORC 2012 standard for material contained inside the mining licence as at 31 May 2015 is 12.0 Mt.

A breakdown of the Lingshan-Mujishan No 7 Quartz Mine Project resource estimate by resource category is:

JORC 2012 Resource Estimate as at 31 May 2015

Element Units Measured . . . . . . . . . . . . . . . . . Indicated . . . . . . . . . . . . . . . . . Inferred . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . .	Tonnes Mt — 7.9 4.1 12.0	SiO2 % 98.79 98.69 98.76	Al2O3 % ppm 0.325 3250 0.283 2830 0.312 3120	Fe2O3
				% ppm 0.069 690 0.083 830 0.074 740

These figures are in close agreement with the MA estimates of total remaining resource within the pit limits (after allowance for surface, premine and past production) of 12.2 Mt @ 98.76% SiO2, 0.305% Al2O3 and 0.064% Fe2O3.

Note: According to Clause 27 of the JORC Code 2012 edition: “in a public report of a Mineral Resource for a significant project for the first time, or when those estimates have materially changed from when they were last reported, a brief summary of the information in relevant sections of Table 1 must be provided”. Table 1 is included in Appendix 1 of this memo and must accompany any reporting of Mineral Resources.

The following recommendations have been made after this review of the technical data on the Lingshan-Mujishan No 7 Quartz Mine:

The surface trench samples show a significantly lower iron grade compared to the drill core samples. Although this maybe a surface weathering effect, it is possible that the drill core samples were contaminated by the drill steel and/or steel in the drill bits used during the drilling of the deposit. This should be investigated as the iron values are low and a key component of the industry standards.
Iron values increase and silica values decrease with depth.
Current processing arrangements have not been successful in lowering the iron grades sufficiently for Photovoltaic (PV) glass use. Silica values are compliant but alternative processing technologies are available and should be investigated.
MA is aware of the use of Oxalic acid in a chemical leaching process at a quartz mine in Turkey to reduce iron levels by 97%, from 3150ppm to 94ppm. This is not an expensive process.

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

MA would conclude that with suitable processing this material can be upgraded to photovoltaic glass use specification
High quality quartzite exists below and adjacent to the ML. Good potential therefore exists to expand the resources at depth (extension to the ML) and into the adjacent areas by application for new MLs or by purchase or leasing adjacent mining licences from current owners.

Andrew J. Vigar B App Sc (Geol), F.AusIMM, MAIG, M.SEG and Glenn C. Sheldon B Sc, M.AusIMM, M.SEG, FAIG Hong Kong Date [●] 2015

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

1.1 JORC CODE, 2012 EDITION — TABLE 1

Notes on data relating to Lingshan-Mujishan No 7 Quartz Mine ProjectResource Estimates. Data provided by Flat Glass Group Co., Ltd. and verified by MA.

Explanations of headings and what type of information is included can be found in the JORC Code 2012, which can be downloaded from: http://www.jorc.org/docs/jorc_code2012.pdf

� SECTION 1 SAMPLING TECHNIQUES AND DATA

(Criteria in this section apply to all succeeding sections).

Criteria
Sampling techniques
Drilling techniques
Drill sample recovery
Logging

Commentary

•
Continuous channel sampling method: The channel
method was used for collection of samples with the
specification of 5cm �3cm. This ensures quality
during collection and analysis of samples. Samples
were packed up as they were from insitu ore layers
and following the method of continuously sampling
and packed in bags and delivered to laboratories.
•
Drill samples were collected from 55mm wire-line
drilling core by splitting the core with a hammer.
Drill core samples were 1 to 3 meters in length, with
the average being 2.5 meters
•
Wire-line coring drilling by locally made drill rig
•
55mm core diameter
•
Drill holes are recorded as core drilling. Included the
drill collar locations, down hole surveys and drill hole
sampling information;
•
The channel method was used for sampling in
trenches, while the half-core sampling method was
used in drillcore sampling
•
Recovery was very good from channel sampling. Core
recovery from wireline drilling was from 84% to 92%,
with the average recovery being 87%. No relationship
was seen between core recovery and silica grade.
•
Core samples have been logged to a level of support
for Mineral Resource estimation
•
All drill core was photographed
•
Most drill core boxes were individually photographed

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

Sub-sampling techniques and sample	•	The core was split by hammer and half taken as a
preparation		sample. Full channel width and depth was sampled.
Quality of assay data and laboratory	•	Assaying was conducted at the Geological Brigades
tests		laboratory in Hefei City
	•	Assays conducted to China National Standards
Verification of sampling and assaying	•	Glenn Sheldon independently collected four check
		assays from open pit walls and two from the
		processing plan. These were assayed and found to fall
		within the range of expected silica, iron and alumina
		content
	•	No documentation of primary data, data entry
		procedures, or data storage protocol was seen.
		National Chinese standards were adopted.
Location of data points	•	By Global positioning system
	•	Gridding system is 1980 Xi’an plane coordinates,
		using the 1985 national height datum
Data spacing and distribution	•	Measurement norms PRC national standard
		GB/T18314-2001
Orientation of data in relation to	•	Sample orientation is unlikely to bias the results. This
geological structure		silica deposit is relatively homogenous.
Sample security	•	Not known
Audits or reviews	•	Data was reviewed by the independent Anhui Province
		Geology Team.

� SECTION 2 REPORTING OF EXPLORATION RESULTS

(Criteria listed in the preceding section also apply to this section.)

Criteria Mineral tenement and land tenure status Exploration done by other parties Geology	Commentary
	• All the relevant licence was available to verify. See report section 3 • Exploration was conducted by the China construction materials industry Geological Survey Corps of Anhui. • Metamorphic quartzite horizon of Middle Proterozoic • See report sections 5 and 6

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

Drill hole Information • Done according to Mineral exploration measurement norms GB/T18314-2001 of PRC

		Work done	Work done	Neighboring	Neighboring
		in this		mining
		mining	right	rights	works	Total amount
Item	Unit	area		utilised		of work
Trenching M3		991.0		6854.0		7845.0
Drilling	m/hole	293.62(m)/		1059.34(m)/		1352.96 (m)/
		2(holes)		6(holes)		8(holes)
Surface	sampling pcs	62		868		930
Core sampling pcs		104		357		461
Basic analysis pcs		166		1225		1391
Combined analysis pcs		60		399		459

Data aggregation methods • According to DZ/T0207-2002 of PRC, Specifications for glass grade silicon material
Relationship between • According to GPS and measurement specifications mineralisation widths and GB/T18314-2001 of PRC intercept lengths

Diagrams

Most of diagrams were provided and are included in the associated report
Balanced reporting • In according to Geological & Mineral Industry standard DZ/T0207-2002 of PRC, Specifications for glass grade silicon material
Other substantive exploration data
Technical information from the surrounding mining licences was given and used in the Mineral Resource Estimate

Further work

Not available

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

� SECTION 3 ESTIMATION AND REPORTING OF MINERAL RESOURCES

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

Criteria
Database integrity
Site visits
Geological interpretation
Dimensions

Commentary

•
According to GPS and measurement specifications
GB/T18314-2001 of the PRC
•
Data was validated prior to resource estimation by the
reporting of basic statistics for each of the grade
fields, including examination of maximum values, and
visual checks of drill traces and grades on sections
and plans.
•
The Competent Person inspected the surface
infrastructure, mine workings, access roads and
completed general inspections of the surrounding
countryside of the Project.
•
There is confidence in the geological interpretation. In
according to Geological & Mineral Industry standard
DZ/T0206-2002 of PRC
•
Surface Maps, trench and drill data guided the
sectional interpretations.
•
This quartzite deposit is a large and relatively
homogenous deposit, largely unaffected by structural
complexity
•
By measurement specifications national PRC standard
GB/T18314-2001
•
The entire resource lies with the mining lease and
consists of all material from the surface down to 80 m
elevation above sea level. The lease dimensions are
therefore about 600 x 300 m with an elevation from
80 to 185 m, or 100 m.
•
Block Model Dimensions (MA check model)

	Type Y X Z Minimum Coordinates 3623200 541400 80 Maximum Coordinates 3623900 541800 200 User Block Size 5 5 3 Min. Block Size 5 5 3 Rotation 0 0 0

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

Estimation and modelling	•	In according to Geological & Mineral Industry	standard
techniques		DZ/T0207-2002 of the PRC
	•	Resources are estimated using weighted	average
		polygonal techniques. the industrial index	of the
		bentonite mine is determined in accordance	with the
		Geological and Mineral Industry	Standard
		[DZ/T0207-2002] of the People’s Republic of China
		Specifications for glass grade silicon material
	•	The defined cross sections and plans were interpreted
		with these criteria
	•	MA conducted an Ordinary Kriging check estimate using
		the Resource Estimation and Mine Design	package
		Surpac 6.6.2 to confirm volumes, tonnages and	grades as
		quoted by the company. They also provided a	guide to
		expected JORC resource categories. These estimates are
		discussed and reported as a validation exercise to
		confirm the Chinese quoted resources as being JORC
		compliant.
Moisture	•	Moisture content 0.15%
Cut-off parameters	•	Industrial grade: SiO2: ≥96%; Al2O3: ≤2.0%;
		Fe2O3: ≤0.33%;
	•	Marginal grade: SiO2: ≥90%; Al2O3: ≤5.5%;
		Fe2O3: ≤0.33%
	•	Minimum thickness of ore rock mined: ≥2m;
Mining factors or assumptions	•	Open cut method
	•	A Life of Mine production schedule was completed
		based on 55 degree pit walls, a base of 80 m	elevation
		and the schedule as supplied by the company, after
		allowing for 88% mining tonnage recovery
Metallurgical factors or	•	The mined material is sold to a third party who blends
assumptions		the material with other producers raw material and
		conducts processing to reduce contaminants
Environmental factors or	•	Overburden or waste rock is insignificant
assumptions	•	All material mined is processed
	•	Sinosteel Preliminary design report includes	a list of
		PRC environmental standards, an environmental
		assessment and confirmation that the project meets such
		environmental standards

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APPENDIX III SUMMARY OF THE INDEPENDENT TECHNICAL REPORT

Bulk density	•	Appropriate for an industrial mineral deposit
	•	93 drill core samples were used to determine a bulk
		density of 2.62 t/m3. 11 of the 93 samples were from
		within the mining licence area
Classification	•	In according to Geological & Mineral Industry standard
		DZ/T0207-2002 of PRC
Audits or reviews	•	Previous resource estimates were done under UNECE
		1997 of PRC
	•	Mining Associates conducted a review of all technical
		data and reports and confirmed the Total Mineral
		Resource Estimate and breakdown by resource category
		compliant with JORC 2012 standard for material inside
		the mining lease as at 31 May 2015
Discussion of relative accuracy/	•	An approach to the resource classification was used
confidence		which combined both confidence in geological
		continuity (domain wireframes) and statistical analysis.
		The level of accuracy and risk is therefore reflected in
		the allocation of the Measured, Indicated and Inferred
		Resource categories.
	•	Using the slope of regression as a guide to classification
		of mineral resource takes the quality and hence accuracy
		of the block estimates into consideration.
	•	Resources estimates have been made on a local basis
		using a block model which reflect the informing sample
		density. The model is suitable for technical and
		economic evaluation.
	•	The deposit is in production.
	•	A Preliminary Design was completed confirmed.

� SECTION 4 ESTIMATION AND REPORTING OF ORE RESERVES

No reserves are reported

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APPENDIX IV TAXATION AND FOREIGN EXCHANGE

This appendix contains a summary of the laws and regulations in respect of taxation and foreign exchange in the PRC and Hong Kong.

TAXATION

A. TAXATION IN THE PRC

Taxes Applicable to Joint-Stock Limited Companies

Enterprise Income Tax Law

According to the Enterprise Income Tax Law of the People’s Republic of China (中華人民共和國企業所得稅法) which was enacted on March 16, 2007 and became effective on January 1, 2008, and the Implementation Rules of the Enterprise Income Tax Law of the People’s Republic of China (中華人民共和國企業所得稅法實施條例), which was enacted on December 6, 2007 and became effective on January 1, 2008, a uniform income tax rate of 25% is applied towards PRC enterprises, foreign investment enterprises and foreign enterprises which have set up production and operation facilities in the PRC.

According to the Enterprise Income Tax Law of the People’s Republic of China, the Implementation Rules of the Enterprise Income Tax Law of the People’s Republic of China and the Administrative Measures for the Determination of High and New Technology Enterprises (高新技術企業認定管理辦法), which were jointly promulgated by the Ministry of Science and Technology, MOF and SAT on April 14, 2008 and became effective on January 1, 2008, high-tech enterprises recognized by the competent government authorities enjoy a preferential enterprise income tax rate of 15%.

Value-added Tax

According to the Provisional Regulations of the People’s Republic of China on Value-added Tax (中華人民共和國增值稅暫行條例) promulgated on December 13, 1993 and in effect since January 1, 1994 and later amended on November 10, 2008 and in effect since January 1, 2009 and the Detailed Rules for Implementation of the Provisional Regulations of the People’s Republic of China on Value-added Tax (中華人民共和國增值稅暫行條例實施細則) in effect since December 25, 1993, amended on October 28, 2011 and in effect since November 1, 2011, institutions and individuals selling goods or providing processing, repairing or replacement services or importing goods within the PRC shall pay VAT. The tax rate of 13% shall be levied on general taxpayers selling or importing grain, edible vegetable oil, tap water, heating supply, air-conditioning, hot water, gas, liquefied petroleum gas, natural gas, marsh gas, coal products for civil use, books, newspapers, magazines, feedstuff, chemical fertilizer, pesticide, farming machines, films for agricultural use and other goods specified by the State Council. The rate applicable to goods exported by taxpayers shall be zero unless otherwise prescribed by the State Council. The rate of 17% shall be levied on taxpayers selling or importing goods other than the above-mentioned items, and on taxpayers providing processing, repair or replacement services. The rate applicable to goods sold or taxable services provided by small-scale taxpayers is 3%. A small-scale taxpayer is defined as a taxpayer engaged in the manufacturing of goods or the supply of taxable services, or primarily dealing in the manufacturing of goods or supply of taxable services while concurrently engaged in the wholesale or retail of goods as secondary

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operations, and has annual taxable sales (hereinafter referred to as “taxable sales”) of less than RMB0.5 million; or a taxpayer engaged in the wholesale or retail of goods and having annual taxable sales of less than RMB0.8 million. Individuals whose annual taxable sales volumes exceeds the standards for small-scaled taxpayers shall be taxed as small-scaled taxpayers; non-enterprise organizations or enterprises without frequent occurrence of taxable acts may choose to be taxed as small-scaled taxpayers.

The new regulations and rules also provide the following:

the input tax for reselling fixed assets could be deducted from the output tax;
the withholding agent of the VAT should be: (1) the domestic agents of foreign entities or individuals, who provide taxable services within the territory of the PRC but have no business institutions in the PRC; or (2) the assignee of the assets or the purchaser or vendor of the services in case there is no domestic agent; and
the preferential policies approved by the State Council before the effectiveness of the above-mentioned amendments on January 1, 2009 could still be applied.

In addition, China has launched Business Tax to Value-added Tax Pilot Program (“B2V”) (營改增) from 2012 and the B2V has been expanded to nationwide in 2013. Currently the VAT taxable services include but not limited to transportation, postal, telecommunication and certain modern services (e.g. R&D and technological services, information technology services, cultural innovation services, logistics services, lease of corporeal movables, attestation and consulting services, etc). The general VAT rate ranges from 6% to 17%, except as otherwise provided in the Provisional Regulations of the People’s Republic of China on Value-added Tax and the Detailed Rules for Implementation of the Provisional Regulations of the People’s Republic of China on Value-added Tax.

Business Tax

According to the Provisional Regulations of the People’s Republic of China on Business Tax (中華人民共和國營業稅暫行條例), which became effective on January 1, 1994 and was later amended on November 10, 2008 and became effective on January 1, 2009, and the Detailed Rules for Implementation of the Provisional Regulations of the People’s Republic of China on Business Tax (中華人民共和國營業稅暫行條例實施細則), which became effective on January 1, 2009 and was later amended on October 28, 2011 and became effective on November 1, 2011, all institutions and individuals providing taxable services, transferring intangible assets or selling real estate within the PRC shall pay business tax. The latest amendments of the abovementioned regulations and rules supplemented the regulatory system in the following aspects:

The withholding agent of the business tax should be: (1) the domestic agents of foreign entities or individuals, who provide taxable services, transferring intangible assets or selling real estate within the territory of the PRC but have no business institutions in the PRC; or (2) the assignee of the assets or the purchaser or vendor of the services in case there is no domestic agent.

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The column specifying the taxable services and business is deleted from the appendix of the regulations, which enable MOF and the SAFE to define the scope of taxable business and services.
The preferential policies approved by the State Council before the effectiveness of the abovementioned amendments on January 1, 2009 could still be applied.

Urban Construction and Maintenance Tax

The PRC Provisional Regulations on Urban Construction and Maintenance Tax (中華人民共和國城市維護建設稅暫行條例) and the Notice of the State Council on Extending the Urban Construction and Maintenance Tax and Educational Surcharges from Chinese to Foreign-Invested Enterprises and Citizens (國務院關於統一內外資企業和個人城市維護建設稅和教育費附加制度的通知), which became effective on January 1, 1985 and November 8, 2011, respectively, impose an urban construction and maintenance tax on entities and individuals based on the amount of consumption tax, value-added tax or business tax they are required to pay at rates of 1%, 5% or 7%, depending on the geographic location of the taxpayer.

Stamp Tax

According to the Provisional Regulations of the People’s Republic of China on Stamp Duty (中華人民共和國印花稅暫行條例) which was brought into effect on October 1, 1988 and amended on January 8, 2011 and the Detailed Rules for Implementation of the Provisional Regulations of The People’s Republic of China on Stamp Duty (中華人民共和國印花稅暫行條例施行細則) in effect since October 1, 1988, institutions and individuals executing or receiving taxable documents within the PRC shall pay stamp tax. The list of taxable documents includes reselling contracts, processing contracts, construction project contracts, property lease contracts, cargo freight contracts, warehousing and storage contracts, loan contracts, property insurance contracts, technical contracts, other documents that resemble contracts in nature, title transfer deeds, business account books, certificates of rights, licenses and other taxable documents specified by MOF.

Pursuant to the Provisional Regulations of China Concerning Stamp Duty and the detailed rules for its implementation, the PRC stamp duty imposed on the transfer of shares of the listed companies of the PRC shall not apply to the acquisition and disposal by non-PRC investors of H Shares outside of the PRC. As stipulated in the regulations, PRC stamp duty shall only be imposed on documents which are executed or received within the PRC and legally binding in the PRC and protected under the PRC law.

Taxes Applicable to Shareholders of Companies

Dividend-related Tax

Individual investors

According to the Individual Income Tax Law of the People’s Republic of China (中華人民共和國個人所得稅法), which became effective on 1 January 1994 and was amended on October 31, 1993,

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August 30, 1999, October 27, 2005, June 29, 2007, December 29, 2007 and June 30, 2011, and its implementation rules for the receipt of dividends paid by the PRC companies, an individual is ordinarily subject to a PRC individual income tax levied at a flat rate of 20%. For a foreign individual shareholder who is not a PRC resident, pursuant to the Circular on the Individual Income Tax Matters after the Repeal of No. Guo Shui Fa [1993] 045 Circular (No. Guo Shui Han [2011]348) 《國家稅務( 總局關於國稅發[1993]045號文件廢止後有關個人所得稅徵管問題的通知》（國稅函[2011]348號）) issued by SAT on June 28, 2011 ), the receipt of dividends on our H Shares is subject to a withholding tax ranging from 5% to 20% (usually 10%) depending on the applicable tax treaty between the PRC and the jurisdiction in which the foreign national resides. For foreign residents of jurisdictions that have not entered a tax treaty with the PRC, the tax rate on dividends is 20%.

Enterprises

Under the Enterprise Income Tax Law of the People’s Republic of China and the its implementation rules, non-resident enterprises having no office or premises inside the PRC or whose income has no actual connection to its office or premises inside the PRC are subject to enterprise income tax at the rate of 10% on their income derived from the PRC. Under the Circular on Questions Concerning Withholding and Remitting Enterprise Income Tax for Dividends Received by Overseas Non-resident Enterprise Shareholders of H Shares from Chinese Resident Enterprises (No. Guo Shui Han [2008]897 《關於中國居民企業向境外( H股非居民企業股東派發股息代扣代繳企業所得稅有關問題的通知》（國稅函[2008]897號）) issued by SAT on November 6, 2008, enterprise income tax at a flat rate of 10% is levied on dividends on H shares received by any overseas enterprise shareholders that are non-PRC residents. The Response to Questions on Enterprise Income Tax over Dividend of B-Shares and Other Shares Received by Non-resident Enterprises (No. Guo Shui Han [2009]394) 《關( 於非居民企業取得B股等股票股息徵收企業所得稅問題的批覆》（國稅函[2009]394號）) issued by SAT on July 24, 2009 further provides that any PRC resident enterprise that publicly issues A-shares, B-shares or overseas shares on stock exchanges in or outside the PRC, such as our H Shares, must withhold enterprise income tax at the rate of 10% from dividends distributed by them to non-resident enterprises.

Tax Treaties

Investors who do not reside in the PRC but reside in jurisdictions that have entered into treaties for the avoidance of double taxation with the PRC may be entitled to a reduction or exemption of the withholding tax imposed on dividends received from a PRC-resident enterprise. The PRC currently has treaties for the avoidance of double taxation with a number of jurisdictions, which include Australia, Canada, France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the United States. The PRC also has an arrangement for the avoidance of double taxation with Hong Kong.

Tax Relating to Share Transfer

Individual Investors

Under the Individual Income Tax Law of the People’s Republic of China (中華人民共和國個人所得稅法) and its implementation rules, individuals are subject to individual income tax at the rate of 20% on gains realized on the sale of equity interests in PRC resident enterprises. The implementation

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rules also provide that the MOF shall draft measures for collection of individual income tax from income on the transfer of shares, and such measures are subject to the approval of the State Council. However, as of the Latest Practicable Date, no such measures have been drafted and enacted. Under the Circular Declaring That Individual Income Tax Continues to Be Exempted over Income of Individuals from Transfer of Shares (Cai Shui Zi [1998] No. 61) 《關於個人轉讓股票所得繼續暫免( 徵收個人所得稅的通知》（財稅字 [1998]61號）) issued by MOF and SAT on March 30, 1998, since January 1, 1997, income of individuals from the transfer of shares in listed enterprises continues to be exempted from individual income tax. After the latest amendment to the Individual Income Tax Law of the People’s Republic of China on September 1, 2011 and the latest amendments to its implementing rules on September 1, 2011, SAT has not stated whether it will continue to exempt from individual income tax income derived by individuals from the transfer of listed shares. However, on December 31, 2009, MOF, SAT and CSRC jointly issued the Circular on Related Issues on Collection of Individual Income Tax over the Income Received by Individuals from Transfer of Listed Shares Subject to Sales Limitation (Cai Shui [2009] No. 167) 《關於個人轉讓上市公司限售股所得徵收個人( 所得稅有關問題的通知》（財稅[2009]167號）), which states that individuals’ income from transferring listed shares on certain domestic exchanges shall continue to be exempted from the individual income tax, except for the shares of certain specified companies under certain situations which are subject to sales limitations (as defined in such Circular and its supplementary notice issued on November 10, 2010). As of the Latest Practicable Date, no legislation has expressly provided that individual income tax shall be collected from non-Chinese resident individuals on the sale of shares in PRC resident enterprises listed on overseas stock exchanges, such as our H Shares, and in practice the taxation administrations do not collect individual income tax on such income.

Enterprises

Under the Enterprise Income Tax Law and its implementation rules, non-resident enterprises are generally subject to enterprise income tax at the rate of 10% with respect to their income derived from sale of shares of PRC companies. However, as of the Latest Practicable Date, no legislation has expressly provided that enterprise income tax shall be collected from non-Chinese resident enterprises on their income derived by them from sale of the shares in PRC companies listed on overseas stock exchanges, such as our H Shares, while the possibility cannot be entirely excluded that taxation administrations will collect enterprise income tax on such income in practice.

Taxation Policy of Shanghai-Hong Kong Stock Connect

On October 31, 2014, MOF, the State Administration of Taxation and CSRC jointly issued the “Circular on the Relevant Taxation Policy regarding the Pilot Programme that Links the Stock Markets in Shanghai and Hong Kong” (關於滬港股票市場交易互聯互通機制試點有關稅收政策的通知) (hereinafter referred to as “Shanghai-Hong Kong Stock Connect Taxation Policy”), which clarified the relevant taxation policy under Shanghai-Hong Kong Stock Connect.

Pursuant to the “Shanghai-Hong Kong Stock Connect Taxation Policy”, individual income tax will be temporarily exempted for the transfer spread income derived from investment by mainland individual investors in stocks listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect from November 17, 2014 to November 16, 2017. Business tax will be temporarily exempted in accordance with the current policy for the spread income derived from dealing in stocks

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listed on the Hong Kong Stock Exchange by mainland individual investors through Shanghai-Hong Kong Stock Connect. For dividends obtained by mainland individual investors or mainland securities investment funds from investment in H Shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect, individual income tax is withheld by H-stock companies at the tax rate of 20%; for dividends obtained by mainland individual investors or mainland securities investment funds from investing in non-H stocks listed on the Hong Kong Stock Exchange through Shanghai- Hong Kong Stock Connect, individual income tax is withheld by China Securities Depository and Clearing Company Limited at the tax rate of 20%. Individual investors who have paid withholding tax overseas may apply for tax credit to the competent tax authority of China Securities Depository and Clearing Company Limited by producing a tax credit document.

Pursuant to the “Shanghai-Hong Kong Stock Connect Taxation Policy”, enterprise income tax will be levied according to law on the transfer spread income (included in total income) derived from investment by mainland corporate investors in stocks listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect. Business tax will be levied or exempted in accordance with the current policy for spread income derived from dealing in stocks listed on the Stock Exchange by investors of mainland entities through Shanghai-Hong Kong Stock Connect. Enterprise income tax will be levied according to law on dividend income (included in total income) obtained by mainland corporate investors from investing in stocks listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect. In particular, enterprise income tax will be exempted according to law for dividend income obtained by mainland resident enterprises that hold H stocks for at least 12 consecutive months. For dividend income obtained by mainland corporate investors, H-Share companies will not withhold dividend income tax for mainland corporate investors. The tax payable shall be declared and paid by the enterprises themselves. Mainland corporate investors, when declaring and paying enterprise income tax themselves, may apply for tax credits according to law in respect of dividend income tax which has been withheld and paid by non-H Share companies listed on the Hong Kong Stock Exchange.

Pursuant to the “Shanghai-Hong Kong Stock Connect Taxation Policy”, mainland investors who transfer stocks listed on the Stock Exchange through Shanghai-Hong Kong Stock Connect shall pay stamp duty in accordance with the current tax laws of Hong Kong. China Securities Depository and Clearing Company Limited and Hong Kong Securities Clearing Company Limited may collect the abovementioned stamp duty on each other’s behalf.

Tax Treaties

Overseas investors that reside in jurisdictions that have entered into treaties for the avoidance of double taxation with the PRC may be entitled to exemption from any income tax imposed by the PRC tax authorities on their income derived from sale of the shares in PRC-resident companies depending on the specific provisions as set forth in the applicable tax treaties. The PRC currently has treaties for the avoidance of double taxation with a number of jurisdictions, which include Australia, Canada, France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the United States (the treaty with the United States does not contain an exemption from any PRC tax imposed on gains derived from the sale of shares in a PRC resident enterprise). The PRC also has an arrangement for the avoidance of double taxation with Hong Kong.

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Additional PRC Tax Considerations

Estate Duty

No liability for estate duty under PRC laws will arise for non-PRC nationals holding H Shares.

Urban Construction and Maintenance Tax

The PRC Provisional Regulations on Urban Construction and Maintenance Tax (中華人民共和國城市維護建設稅暫行條例), which were promulgated by the State Council and became effective on February 8, 1985, and the Notice of the State Council on Extending the Urban Construction and Maintenance Tax and Educational Surcharges from Chinese to Foreign-Invested Enterprises and Citizens (國務院關於統一內外資企業和個人城市維護建設稅和教育費附加制度的通知), which was promulgated by the State Council on October 18, 2010 and became effective on December 1, 2010, impose an urban construction and maintenance tax on entities and individuals based on the amount of consumption tax, value-added tax or business tax they are required to pay at rates of 1%, 5% or 7%, depending on the geographic location of the taxpayer.

PRC Laws and Regulations Concerning Foreign Exchange Control

The lawful currency of the PRC is Renminbi, which is subject to foreign exchange controls and is not freely convertible into foreign exchange. SAFE, under the authority of the PBOC, administers all matters relating to foreign exchange, including the enforcement of foreign exchange control regulations.

On December 28, 1993, PBOC issued the Notice to Further Reform the Foreign Exchange Control System (進一步改革外匯管理體制的通知), which became effective on January 1, 1994. The Notice abolished the system of foreign exchange quotas and announced the unification of the official Renminbi exchange rate and the market rate for Renminbi established at swap centers.

On January 29, 1996, the State Council promulgated Regulation of Foreign Exchange (中華人民共和國外匯管理條例) (the “Foreign Exchange Regulations”) which became effective on April 1, 1996. The Foreign Exchange Regulations classify all international payments and transfers into current account items and capital account items. Most of the current account items are no longer subject to the approval from SAFE while capital account items still are. The Foreign Exchange Regulations were subsequently amended on January 14, 1997 and on August 1, 2008. This latest amendment affirmatively states that the State shall not restrict international current account payments and transfers.

On June 20, 1996, PBOC promulgated the Regulations for Administration of Settlement, Sale and Payment of Foreign Exchange (結匯、售匯及付匯管理規定) (the “Settlement Regulations”) which took effect on July 1, 1996. The Settlement Regulations superseded the Provisional Regulations for the Administration of Settlement, Sale and Payment of Foreign Exchange (結匯、售匯及付匯暫行規定) and abolished the remaining restrictions on convertibility of foreign exchange in respect of current account items while retaining the existing restrictions on foreign exchange transactions in respect of capital account items.

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On October 25, 1998, PBOC and the SAFE promulgated the Notice Concerning Closure of the Foreign Exchange Swap Business Activities (關於停辦外匯調劑業務的通知) pursuant to which with effect from December 1, 1998, all foreign exchange swapping business in the PRC for foreign-invested enterprises shall be discontinued, while the trading of foreign exchange by foreign-invested enterprises shall come under the banking system for the settlement and sale of foreign exchange.

On July 21, 2005, PBOC announced that the PRC would implement the managed floating exchange rate regime with effect from the same day, and exchange rates are determined based on market supply and demand with reference to a basket of currencies. The exchange rate of RMB is no longer pegged to the U.S. dollar. The PBOC will announce the closing prices of foreign currencies (such as the U.S. dollar) to RMB in the interbank foreign exchange markets after the closing of the markets on each working day, so as to determine the central parity for RMB trading on the next working day.

Since January 4, 2006, PBOC improved the method of generating the middle price for quoting the Renminbi exchange rate by introducing an enquiry system while keeping the match-making system in the inter-bank spot foreign exchange market. In addition, PBOC provided liquidity in the foreign exchange market by introducing the market-making system in the inter-bank foreign exchange market. After the introduction of the enquiry system, the generation of the middle price for quoting the Renminbi was replaced by a new mechanism under which PBOC authorized the China Foreign Exchange Trading System to determine and announce the middle price for quoting the Renminbi against the U.S. dollar, based on the enquiry system, at 9:15 a.m. on each business day.

On August 5, 2008, the State Council promulgated the amended Regulations on Foreign Exchange Administration of the People’s Republic of China (外匯管理條例) (the “Amended Regulations on Foreign Exchange”) which made significant changes on the supervisory system for foreign exchange in the PRC. Firstly, the Amended Regulations on Foreign Exchange adopted balanced treatment on the inflow and outflow of foreign capital. Incomes in foreign currencies overseas can be remitted to the PRC or remained overseas, and foreign currencies of capital account items and funds for settlement in foreign currencies can only be used according to the purposes approved by relevant competent authorities and foreign exchange administration. Secondly, the Amended Regulations on Foreign Exchange improved the RMB exchange mechanism based on market supply and demand. Thirdly, the Amended Regulations on Foreign Exchange enhanced the monitoring of cross-border capital flow in foreign currencies, whereby the state could implement necessary protection or controlling measures when material imbalance of income and expenses related to cross-border trading arise or might arise, or serious crises in the domestic economy occur or might occur. Fourthly, the Amended Regulations on Foreign Exchange enhanced the regulation and administration on foreign currency trading, and granted extensive authorization to SAFE to enhance its supervisory and administrative capacity. Foreign exchange revenue in respect of current account items may be retained or sold to financial institutions operating a foreign exchange sale or settlement business.

Before retaining foreign exchange revenue under the capital account or selling it to any financial institution operating a foreign exchange sale or settlement business, the approval of the competent foreign exchange administrative authorities shall be obtained, unless otherwise provided by the State.

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Enterprises that require foreign exchange for recurring activities such as trading and payment of staff remuneration may purchase foreign exchange from designated banks, subject to the production of relevant supporting documents.

In addition, where an enterprise requires foreign exchange for the payment of dividends, such as the distribution of profits by a foreign-invested enterprise to its foreign investor, then, subject to the due payment of taxes on such dividends, the amount required for the payment of dividends may be withdrawn from funds in foreign exchange accounts maintained with designated banks and, where the amount of the funds in foreign exchange is insufficient, the enterprise may purchase additional foreign exchange from designated banks.

Convertibility of foreign exchange in respect of capital account items, including direct investments and capital contributions, is still subject to restrictions, and prior approval from SAFE must be obtained.

The Notice of the SAFE on Issues Concerning the Foreign Exchange Administration of Overseas Listing (國家外匯管理局關於境外上市外匯管理有關問題的通知), which was promulgated by the SAFE on and with effect from December 26, 2014, stipulates that:

SAFE and its branches and foreign exchange authorities supervise, manage and inspect, among other things, the business registration, account opening and use, cross-border payments and capital exchange involved in the overseas listing of domestic companies.
A domestic company shall conduct overseas listing registration with Foreign Exchange Bureaus at the place of its incorporation with the overseas listing registration form, supporting documents for the CSRC’s approval of overseas listing, announcement relating to completion of overseas offering and the relevant supplementary materials within 15 working days after the completion of the offering of its overseas listing shares.
A domestic company may repatriate the proceeds from offshore listing to its designated domestic account or retain such proceeds at its designated overseas account. The use of such proceeds shall be consistent with the content of the prospectus or other public disclosure documents such as documents for issuance of corporate bonds, circulars to shareholders and resolutions of shareholders’ meetings. Proceeds raised from issuance of convertible bonds and intended to be remitted to its domestic account shall be remitted to its specific domestic account for foreign debts and the company shall complete relevant procedures in accordance with relevant regulations on foreign debts administration; and proceeds raised from issuance of other types of securities by a domestic company and intended to be remitted to its domestic account shall be remitted to its special domestic account for offshore listing (foreign exchange) or payment account (RMB).
A domestic company may use overseas funds as stipulated by relevant provisions or remit funds out of the PRC to repurchase overseas shares. Where the domestic company chooses to remit funds out of the PRC to repurchase overseas shares, it should, by presenting the certificate of overseas listing registration obtained following the registration of the repurchase related information (including change procedures) at the local Foreign

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Exchange Bureaus (if fail to register the repurchase related information, it is required to conduct the registration within 20 working days before the proposed repurchase and obtain relevant registration certificate) and statements or supporting materials of the repurchase, complete the remittance with deposit bank through domestic account for offshore listing (foreign exchange) or payment account (RMB). Upon completion of the repurchase, any surplus in the funds remitted overseas for such repurchase shall be transferred back to its designated domestic account or domestic company’s domestic account for offshore listing (foreign exchange) or payment account (RMB).

A domestic shareholder may, in accordance with applicable regulations, use overseas funds as stipulated by relevant provisions or remit funds out of the PRC to increase his/her overseas shares of a domestic company. Where the domestic shareholder chooses to remit funds out of the PRC to increase his/her shareholding, he/she should, by presenting his/her overseas shareholding registration certificate and statements or supporting materials of the shareholding increase, complete the transfer with deposit bank through domestic shareholder’s domestic account for offshore holding. Upon completion of the shareholding increase, any surplus in the funds remitted overseas for such increase shall be transferred back to the said account.
A domestic shareholder’s income raised from reduction or transaction of overseas shares of a domestic company or raised from the shares delisted from overseas stock exchange on the capital account may be deposited at the shareholder’s overseas account or remitted to the domestic account for offshore shareholding. Where the domestic shareholder chooses to remit the income to its domestic account, the domestic shareholders may, by presenting the overseas shareholding registration certificate, complete the transfer or settlement procedures with the bank.

The Notice of the SAFE on Further Simplifying and Improving the Foreign Exchange Administration Policies in Relation to Direct Investment (國家外匯管理局關於進一步簡化和改進直接投資外匯管理政策的通知), which was promulgated by the SAFE on February 13, 2015 and will become effective on June 1, 2015, cancels two matters that require administrative approval, i.e., foreign exchange registration approval under domestic and overseas direct investments, which shall be verified and handled directly by banks under the indirect supervision of the SAFE and its branch offices through banks instead. Banks and their branches shall carry out direct investment foreign exchange registration and the related services as guided by the local foreign exchange bureau and perform their auditing, statistical monitoring and reporting duties subject to their authorities. A market player involved may elect a bank at the place of its incorporation for direct investment foreign exchange registration. Upon registration, it may open an account, transfer funds and other businesses for subsequent direct investment, including inward or outward remittances of profits and bonus. It also simplifies confirmation registration and administration over a foreign investor’s contribution under domestic direct investment, cancels confirmation registration for a foreign investor’s non-monetary contribution and his acquisition of equity interest in a PRC entity under domestic direct investment, and cancels overseas re-investment foreign exchange filing and annual survey on direct investment to register stock rights instead.

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B. Hong Kong Taxation

Tax on Dividends

Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us.

Capital Gains and Profit Tax

No tax is imposed in Hong Kong in respect of capital gains from the sale of H shares. However, trading gains from the sale of the H shares by persons carrying on a trade, profession or business in Hong Kong, where such gains are derived from or arise in Hong Kong from such trade, profession or business will be subject to Hong Kong profits tax, which is currently imposed at the maximum rate of 16.5% on corporations and at the maximum rate of 15% on unincorporated businesses. Certain categories of taxpayers are likely to be regarded as deriving trading gains rather than capital gains (for example, financial institutions, insurance companies and securities dealers) unless these taxpayers can prove that the investment securities are held for long-term investment purposes.

Trading gains from sales of the H Shares effected on the Hong Kong Stock Exchange will be considered to be derived from or arise in Hong Kong. Liability for Hong Kong profits tax would thus arise in respect of trading gains from sales of H Shares effected on the Hong Kong Stock Exchange realized by persons carrying on a business of trading or dealing in securities in Hong Kong.

Stamp Duty

Hong Kong stamp duty, currently charged at the ad valorem rate of 0.1% on the higher of the consideration for or the market value of the H Shares, will be payable by the purchaser on every purchase and by the seller on every sale of any Hong Kong securities, including H Shares (in other words, a total of 0.2% is currently payable on a typical sale and purchase transaction involving H Shares). In addition, a fixed duty of HK$5.00 is currently payable on any instrument of transfer of H Shares. Where one of the parties is a resident outside Hong Kong and does not pay the ad valorem duty due by it, the duty not paid will be assessed on the instrument of transfer (if any) and will be payable by the transferee. If no stamp duty is paid on or before the due date, a penalty of up to 10 times the duty payable may be imposed.

Estate Duty

The Revenue (Abolition of Estate Duty) Ordinance 2005 abolished estate duty in respect of deaths occurring on or after February 11, 2006.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

This appendix sets out summaries of certain aspects of the PRC judicial system and its arbitration system related to the operation and business of the Company as well as the legal regulations and securities regulations of the Company. This appendix also contains a summary of certain Hong Kong legal and regulatory provisions, including the summaries of certain material differences between PRC and Hong Kong company law, certain requirements of the Hong Kong Listing Rules and additional provisions required by the Hong Kong Stock Exchange for inclusion in the articles of association of the PRC issuers.

THE PRC LEGAL SYSTEM

The PRC legal system is based on the PRC Constitution (中華人民共和國憲法) and is made up of written laws, administrative regulations, local regulations, autonomy regulations, separate regulations, rules and regulations of State Council departments, rules and regulations of local governments and international treaties of which the PRC government is a signatory. Decided court cases do not constitute binding precedents, although they may be used for the purposes of judicial reference and guidance.

The National Peoples’ Congress of the PRC (“NPC”) and the Standing Committee of the NPC are empowered to exercise the legislative power of the State. The NPC has the power to formulate and amend basic laws governing State organs, civil and criminal matters and other matters.

The Standing Committee of the NPC is empowered to formulate and amend laws other than those required to be enacted by the NPC and to supplement and amend any parts of laws enacted by the NPC during the adjournment of the NPC, provided such supplements and amendments are not in conflict with the basic principles of such laws. The Standing Committee of the NPC is empowered to interpret, enact and amend other laws not required to be enacted by the NPC.

The State Council is the highest organ of the PRC administration and has the power to formulate administrative regulations based on the constitution and laws.

The people’s congresses of provinces, autonomous regions and municipalities and their respective standing committees may formulate local regulations based on the specific circumstances and actual requirements of their own respective administrative areas, subject to the constitution, laws and administrative regulations. The people’s congresses of larger cities and their respective standing committees may formulate local regulations based on the specific circumstances and actual requirements of such cities and take the same effect after submitting to the standing committee of the people’s congresses of provinces or autonomous regions for approval. The standing committee of the people’s congresses of provinces or autonomous regions shall examine the legality of local regulations submitted for approval, and such approval should be granted within four months if they are not in conflict with the constitution, laws, administrative regulations and local regulations of the province or autonomous region concerned. Where conflicts with the rules and regulations of the People’s Government of the province or autonomous region concerned are identified in the examination of local regulations of larger cities by the standing committee of the people’s congresses of provinces or autonomous regions, a decision should be made to deal with the matter. “Larger cities” refer to cities where the people’s governments of provinces or autonomous regions are located, cities where special economic zones are located and larger cities as approved by the State Council.

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People’s congresses of national autonomous areas have the power to enact autonomy regulations and separate regulations in the light of the political, economic and cultural characteristics of the nationality (nationalities) in the areas concerned. The autonomy regulations and separate regulations of autonomous regions shall be submitted to the Standing Committee of the NPC for approval before taking effect. The autonomous regulations and separate regulations of the autonomous prefectures or counties shall be submitted to the standing committees of the people’s congresses of the relevant provinces, autonomous regions or municipalities. Based on the characteristics of the local nationality (nationalities), adaptations to the provisions of laws and administrative regulations may be introduced to the autonomy regulations and separate regulations so long as they do not contravene the basic principles of the laws or administrative regulations, provided that no adaptations shall be made to specific provisions on national autonomous areas contained in the constitution, autonomy law of national areas and other relevant laws and administrative regulations.

The ministries, commissions, PBOC, National Audit Office of the State Council and institutions with administrative functions directly under the State Council may formulate department rules within the jurisdiction of their respective departments based on the laws and the administrative regulations, decisions and rulings of the State Council. Matters governed by the departmental rules and regulations should be those for the enforcement of the laws and administrative regulations, decisions and rulings of the State Council. The people’s governments of provinces, autonomous regions, municipalities and larger cities may formulate rules based on the laws, administrative regulations and local regulations of such provinces, autonomous regions and municipalities.

According to the PRC Constitution, the power to interpret laws is vested in the Standing Committee of the NPC. According to the Decision of the Standing Committee of the NPC Regarding the Strengthening of Interpretation of Laws passed on June 10, 1981, the Supreme People’s Court has the power to give general interpretation on questions involving the specific application of laws and decrees in court trials. The State Council and its ministries and commissions are also vested with the power to give interpretation of the administrative regulations and department rules which they have promulgated. At the regional level, the power to give interpretations of the local laws and regulations as well as administrative rules is vested in the regional legislative and administrative organs which promulgate such laws, regulations and rules.

THE PRC JUDICIAL SYSTEM

Under the PRC Constitution and the Law of Organization of the People’s Courts of the PRC (中華人民共和國法院組織法), the PRC judicial system is made up of the Supreme People’s Court, the local people’s courts, military courts and other special people’s courts.

The local people’s courts are divided into three levels, namely, the primary people’s courts, the intermediate people’s courts and the high people’s courts. The primary people’s courts may set up civil, criminal, economic and administrative divisions. The intermediate people’s courts have divisions similar to those of the primary people’s courts and other special divisions (such as the intellectual property division). These two levels of people’s courts are subject to supervision of the

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high people’s courts. The people’s procuratorates also have the right to exercise legal supervision over the civil proceedings of people’s courts of the same level and lower levels. The Supreme People’s Court is the highest trial organ of the PRC. It supervises the administration of justice by the people’s courts at all levels.

The people’s court shall apply the system whereby the second instance is final, i.e., the judgment or ruling of the second instance at a people’s court is final. A party to the case concerned may appeal to the people’s court at the next higher level against the judgment or ruling of the first instance. The people’s procuratorate may appeal to the people’s court at the next higher level in accordance with procedures stipulated by the laws. In the absence of any appeal by any parties to the case and any appeal by the people’s procuratorate within the stipulated period, the judgment or ruling of the people’s court shall be the final judgment or rulings. Judgments or rulings of the second instance of the intermediate people’s courts, the higher people’s courts and the Supreme People’s Court are final. Judgments or rulings of the first instance of the Supreme People’s Court are also final. If, however, the Supreme People’s Court or a people’s court at a higher level finds an error in a final and binding judgment which has taken effect in any people’s court at a lower level, or the president of a people’s court finds an error in a final and binding judgment which has taken effect in the court over which he presides, a retrial of the case may be conducted according to the adjudication supervision procedures.

The Civil Procedure Law of the PRC (the “Civil Procedure Law”) promulgated by the NPC on April 9, 1991, amended by the Standing Committee of the NPC on October 28, 2007 and August 31, 2012 and which became effective on January 1, 2013 prescribes the provisions for instituting a civil action, the jurisdiction of the people’s courts, the procedures to be followed for conducting a civil action, and the procedures for enforcement of a civil judgment or ruling. All parties to a civil action conducted within the PRC must comply with the Civil Procedure Law. A civil case is generally heard by a court located in the defendant’s place of domicile. The competent court may also be selected by express agreement amongst the parties to a contract provided that the court selected is located at the plaintiff’s or the defendant’s place of domicile, the place of performing the contract or the place of executing the contract or the object of the action, provided that the provisions of the Civil Procedure Law regarding the level of jurisdiction and exclusive jurisdiction shall not be violated.

A foreign national or foreign enterprise is generally given the same litigation rights and obligations as a citizen or legal person of the PRC. Should a juridical system of a foreign country limit the litigation rights of PRC citizens and enterprises, subject to the principle of reciprocity, the PRC courts may apply the same limitations to the citizens and enterprises (in China) of that foreign country. If any party to a civil action refuses to comply with a judgment or ruling made by a people’s court or an award made by an arbitration tribunal in the PRC, the other party may apply to the people’s court for the enforcement of the same within a stipulated period. Should anyone be unable to execute the judgment of the people’s court within a stipulated period, as a result of any party’s application, the people’s court shall enforce such a judgment in accordance with the law.

A party seeking to enforce a judgment or ruling of a people’s court against a party who is not personally or whose property is not within the PRC may apply to a foreign court with jurisdiction over the case for recognition and enforcement of such judgment or ruling. Similarly, if the PRC has entered into a treaty relating to judicial enforcement with the relevant foreign country or a relevant

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international treaty, a foreign judgment or ruling may also be recognized and enforced according to PRC enforcement procedures by a PRC court based on the equity principle unless the people’s court considers that the recognition or enforcement of a judgment or ruling will violate the basic legal principles of the PRC or its sovereignty or national security, or social and public interest.

THE PRC COMPANY LAW, SPECIAL REGULATIONS AND MANDATORY PROVISIONS

The PRC Company Law was adopted by the Standing Committee of the Eighth NPC at its Fifth Meeting on December 29, 1993 and came into effect on July 1, 1994. It was amended fourth on December 25, 1999, August 28, 2004, October 27, 2005 and revised on December 28, 2013. The latest revised PRC Company Law came into effect on March 1, 2014.

The Special Regulations of the State Council on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies (the “Special Regulations”) were passed at the 22nd Standing Committee Meeting of the State Council on July 4, 1994 and promulgated and implemented on August 4, 1994. The Special Regulations are formulated in respect of the overseas share subscription and listing of joint stock limited companies.

The Mandatory Provisions of the Companies Seeking Overseas Listing (the “Mandatory Provisions”) promulgated by the former Securities Commission and the former State Commission for Restructuring the Economic System on August 27, 1994 and the ‘‘Circular Regarding Comments on the Amendments to Articles of Association of Companies Listed in Hong Kong’’ (“Circular Regarding Comments on the Amendments”) jointly issued by the Overseas-Listing Department of the China Securities Regulatory Commission and the Production System Department of the former State Commission for Restructuring the Economic System prescribe provisions which must be incorporated in the articles of association of joint stock limited companies to be listed on overseas stock exchanges.

Set out below is a summary of the major provisions of the PRC Company Law, the Special Regulations and the Mandatory Provisions.

General

A “company” is a corporate legal person incorporated within the PRC under the PRC Company Law with independent legal person properties and entitlements to such legal person properties. The liability of the company is limited to the full amount of its assets and the liability of its shareholders is limited to the extent of the capital contributions subscribed or the shares subscribed respectively by them. Companies can be divided into two different categories: limited liability companies and joint stock limited liability companies.

A company must conduct its business in accordance with law and business ethics. A company may invest in other limited liability companies and joint stock limited companies. The liabilities of the company to such invested companies are only limited to the capital contributions paid or shares subscribed. Unless otherwise provided by laws, a company shall not be the capital contributor bearing joint and several liabilities associated with the debts of the invested enterprises.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Incorporation

A joint stock limited liability company may be incorporated by promotion or subscription. Incorporation by promotion refers to the incorporation in which the entire share capital to be issued by the company is subscribed by the promoters. If the company is established by the public subscription method, parts of the shares to be issued by the company must be subscribed by its promoters while the remaining shares must be offered for subscription by the public or by specified persons.

A joint stock limited liability company may be incorporated by a minimum of two but not more than two hundred promoters. At least half of the promoters must have residence within the PRC. Joint stock limited liability companies incorporated by promotion are companies the entire registered capital of which is subscribed for by the promoters. Before the registered capital subscribed by the promoters is paid, no stock can be offered to others for subscription.

When incorporating a company by promotion, the promoters shall subscribe, in writing, to the full amount of shares provided in the articles of association and make capital contributions as per the articles of association. In the case of making capital contributions in non-monetary properties, the promoters shall go through the procedures for the transfer of property rights according to laws. If any of the promoters fails to make capital contributions by following the aforesaid provisions, it shall bear the liabilities for breach of contract under the stipulations in the promoter’s agreement. After the promoters fully subscribe to the capital contributions provided for in the articles of association, the promoters shall elect the board of directors and supervisory board. The board of directors shall file an application for registration with the company registration authority and submit therewith the articles of association and any other documents required by laws or administrative regulations.

When a limited liability company becomes a joint stock limited liability company, the conversion paid-up capital shall not exceed the company’s net asset value.

A joint stock limited liability company is formally established and has the status of a legal person after the approval of registration has been given by the relevant administration bureau for industry and commerce and a business license has been issued.

A joint stock limited liability company’s promoter shall bear the following liabilities:

(i) Where the company cannot be incorporated, they shall bear the joint and several liability for all the debts and expenses incurred in the act of incorporation;
(ii) Where the company cannot be incorporated, they shall bear the joint and several liability for refunding the subscription monies paid by the subscribers, plus their bank deposit interest calculated for the same period of time; and
(iii) Where the interests of the company are impaired due to the fault committed by the promoters in the process of the incorporation of the company, they shall bear the liability to pay compensation to the company.

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Share capital

The promoter of a joint stock limited liability company may make capital contribution in currencies, or in kind or by way of injection of assets, intellectual property rights or land use rights based on their appraised value, and may also convert lawfully transferred non-monetary assets into capital contribution with a monetary value, save for assets prohibited to be contributed as capital by the law or administrative regulations. If a capital contribution is made other than in cash, a valuation and verification of the asset contributed must be carried out without any overvaluation or under-valuation, subject to any provisions of the law or administrative regulations on valuation.

A joint stock limited liability company may issue registered or bearer share certificates. However, shares issued to promoters or legal persons shall be in the form of registered shares and shall be registered under the name of such promoter or legal person and shall not be registered under a different name or the name of a representative.

The Special Regulations and the Mandatory Provisions provide that shares issued to foreign investors and listed overseas be issued in registered form and shall be denominated in Renminbi and subscribed for in foreign currency. Shares issued to foreign investors and investors from Hong Kong, Macau and Taiwan and listed in Hong Kong are classified as H Shares, and those shares issued to investors within the PRC other than the territories specified above are known as domestic shares. Under the Special Regulations, upon approval of the CSRC, a company may agree, in the underwriting agreement in respect of an issue of H Shares, to retain not more than 15% of the aggregate number of H Shares proposed to be issued besides the amount of underwritten shares. The share offering price may be equal to or greater than the par value, but may not be less than the par value.

Increase in share capital

According to the PRC Company Law, the issuance of shares shall be conducted in a fair and equitable manner. Shares in the same class shall rank pari passu with one another. Shares of the same class in the same offer shall be issued on the same conditions and at the same price. The same price per share shall be paid by any units or individuals subscribing for shares. When a joint stock limited liability company is issuing new shares, resolutions shall be passed by a shareholders’ general meeting, approving the class and number of the new shares, the issue price of the new shares, the commencement and end of the new share issue and the class and amount of new shares to be issued to existing shareholders; and a resolution made at a general meeting on increasing the capital shall be adopted by shareholders representing 2/3 or more of the voting rights of the shareholders in presence. When a joint stock limited company launches a public issue of new shares with the approval of the securities regulatory authorities under the State Council, a new share offering prospectus and financial accounting report must be published and a subscription form must be prepared. After the new share issuance of the company has been paid up, the change must be registered with the company registration authorities and an announcement must be made. Where a joint stock limited liability company is issuing new shares to increase its registered capital, the subscription of new shares by shareholders shall be conducted in accordance with provisions on the payment of subscription amounts in relation to the incorporation of the company.

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Besides the PRC Company Law’s provision that the issue of new shares shall be approved by a shareholders’ general meeting, the Securities Law also stipulates that any company that makes an initial public offer (IPO) of its stock shall: (i) have a sound organizational structure and be well-operated; (ii) have a profitable outlook and be of sound financial status; (iii) have no record of having filed any false financial statement in the previous three years or any other major legal irregularity; and (iv) meet any other State Council-approved requirement prescribed by the securities regulatory authority under the State Council.

Reduction of share capital

According to the PRC Company Law, if a joint stock limited liability company plans to reduce its registered capital, such a plan shall be subject to the consideration and approval of the general meeting of the joint stock limited liability company; and a resolution made at a general meeting of a joint stock limited liability company on reducing the capital shall be adopted by shareholders representing 2/3 or more of the voting rights of the shareholders in presence.

A joint stock limited liability company may reduce its registered capital in accordance with the following procedures prescribed by the PRC Company Law: (i) the joint stock limited liability company shall prepare a balance sheet and a property list; (ii) the reduction of registered capital must be approved by shareholders in a shareholders’ general meeting; (iii) the joint stock limited liability company shall inform its creditors of the reduction in capital within ten days and publish an announcement of the reduction in the newspaper within thirty days after the resolution approving the reduction has been passed; (iv) the creditors of the company may within the statutory prescribed time limit require the company to pay its debts or provide guarantees covering the debts; and (v) the company must apply to the relevant administration bureau for industry and commence the registration of the reduction in registered capital.

Repurchase of shares

A company may not purchase its own shares other than for one of the following purposes: (i) to reduce its registered share capital; (ii) to merge with another company that holds its shares; (iii) to grant shares to its employees as incentives; (iv) to purchase its own shares from its shareholders who are against the resolution regarding the merger or demerger with other company in a shareholders’ general meeting; and (v) such other purposes permitted by law and administrative regulations.

Where a company needs to purchase its own shares for any of the reasons as mentioned in Items (i) through (iii) above, it shall be subject to a resolution of the general meeting. After the company purchases its own shares pursuant to the aforesaid provisions, it shall, under the circumstance as mentioned in Item (i), write them off within 10 days after the purchase; while under either circumstance as mentioned in Item (ii) or (iv), transfer them or write them off within six months.

The shares purchased by the company according to Item (iii) above shall not exceed 5% of the total shares already issued by the company. The fund used for the share acquisition shall be paid from the after-tax profits of the company. The shares purchased by the company shall be transferred to the company’s employees within one year.

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The Mandatory Provisions specifies that the company may, according to procedures specified in the articles of association and upon approval of relevant competent authorities, buy back its issued shares for the aforesaid purposes by way of general offer to the shareholders or transaction in the stock exchange or through agreement outside the stock exchange.

No company may accept any subject matter taking the stocks of this company as a pledge.

Transfer of shares

Shares held by shareholders may be transferred in accordance with the relevant laws and regulations.

A shareholder may only effect a transfer of its shares on a stock exchange established in accordance with law or by other ways as required by the State Council. Registered shares may be transferred after the shareholders endorse their signatures on the back of the share certificates or in any other manner specified by the law or administrative regulations. Following the transfer, the company shall enter the name of the transferee and its address into the share register. The transfer of bearer’s share certificate shall become effective upon the delivery of such share certificate to the transferee by the shareholder.

Subject to the PRC Company Law, no changes of registration in the share register provided in the foregoing shall be effected during a period of twenty days prior to the convening of the shareholders’ general meeting or five days prior to the record day for the purpose of determining entitlements to dividend distributions, subject to any legal provisions on the registration of changes in the share register of listed companies.

According to the Special Provisions, no changes of share transfer registration may be made to the register of shareholders within 30 days prior to a general meeting of the company is held, or within five days prior to the benchmark date decided by the company for the distribution of dividends.

Shares held by a promoter may not be transferred within one year after the company’s establishment. Shares of the company issued prior to the public issue of shares shall not be transferred within one year from the date of the company’s listing on a stock exchange. Directors, supervisors and the senior management of a company shall declare to the company their shareholdings in the company and any changes in such shareholdings. During their term of office, they shall transfer no more than 25% of the shares they hold in the company each year. They shall not transfer the shares they hold within one year from the date of the company’s listing on a stock exchange, nor within six months after they have resigned from their positions with the company. The articles of association may lay down other restrictive provisions in respect of the transfer of shares in the company held by the directors, supervisors and the senior management of the company.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Shareholders

A shareholder’s rights and duties are all stipulated in the company’s articles of association, which is binding on all shareholders. Under the PRC Company Law and the Mandatory Provisions, the rights of a shareholder include:

(i) to attend shareholders’ general meetings and exercise the voting rights on the basis of the number of the shares held by such shareholder personally or appoint an agent to attend such meetings and exercise the rights referred to hereinabove;
(ii) to transfer the shares held by such shareholder subject to the applicable laws, regulations and the company’s articles of association;
(iii) to bring an action in the people’s court to rescind the resolution when any law or administrative regulation or any legal right or interest of any shareholder is violated by a resolution passed by the shareholders’ general meeting or the board of directors;
(iv) to inspect the articles of association, share register, counterfoil of company debentures, minutes of shareholders’ general meetings, board resolutions, resolutions of the supervisory board and financial and accounting reports and to make proposals or enquiries in respect of the company’s operations;
(v) to receive dividends in respect of the number of shares held;
(vi) to receive residual properties of the company in proportion to their shareholdings upon the termination or liquidation of the company; and
(vii) any other shareholders’ rights provided for in the articles of association.

A shareholder’s obligations and responsibilities include: Abide by the articles of association, pay subscription funds as per the shares it subscribed, bear liability for the company to the extent of the shares subscribed, not injure any of the interests of the company or of other shareholders of the company by abusing the shareholder’s rights, or injure the interests of any creditor of the company by abusing the independent status of legal person or the shareholder’s limited liabilities, and any other obligations of shareholders as specified in the articles of association.

Shareholders’ general meetings

The shareholders’ general meeting is the organ of authority of the company, which exercises its powers in accordance with the PRC Company Law.

The shareholders’ general meeting exercises the following principal powers:

(i) to decide on the company’s operational policies and investment plans;

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(ii) to elect or remove the directors and supervisors (that are not staff representatives) and to decide on matters relating to the remuneration of directors and supervisors;
(iii) to examine and approve reports of the board of directors;
(iv) to examine and approve reports of the supervisory board or supervisor;
(v) to examine and approve the company’s annual financial budget and final accounts;
(vi) to examine and approve the company’s proposals for profit distribution plans and recovery of losses;
(vii) to decide on any increase or reduction of the company’s registered capital;
(viii) to decide on the issue of bonds by the company;
(ix) to decide on issues such as merger, division, dissolution and liquidation of the company and other matters;
(x) to amend the company’s articles of association; and
(xi) other powers as provided for in the articles of association.

Shareholders’ general meetings are required to be held once every year. An extraordinary shareholders’ general meeting is required to be held within two months after the occurrence of any of the following:

(i) the number of directors is less than the number stipulated by the law or less than two-thirds of the number specified in the articles of association;
(ii) the aggregate losses of the company which are not recovered reach one third of the company’s total paid-in share capital;
(iii) when shareholders alone or in aggregate holding 10% or more of the company’s shares request the convening of an extraordinary general meeting;
(iv) whenever the board of directors deems necessary;
(v) when the supervisory board so requests; or
(vi) other circumstances as provided for in the articles of association.

Shareholders’ general meetings shall be convened by the board of directors, and presided over by the chairman of the board of directors. In the event that the chairman is incapable of performing or not performing his duties, the meeting shall be presided over by the vice chairman. In the event that the vice chairman is incapable of performing or not performing his duties, a director nominated by

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more than half of directors shall preside over the meeting. Where the board of directors is incapable of performing or not performing its duties of convening the shareholders’ general meeting, the supervisory board shall convene and preside over such meeting in a timely manner. In case the supervisory board fails to convene and preside over such meeting, shareholders alone or in aggregate holding more than 10% of the company’s shares for ninety days consecutively may unilaterally convene and preside over such meeting.

Subject to the PRC Company Law, notice of the shareholders’ general meeting stating the time and venue of and matters to be considered at the meeting shall be given to all shareholders twenty days before the meeting. Notice of extraordinary general meetings shall be given to all shareholders fifteen days prior to the meeting. Notice of the issuance of bearer’s share shall be announced thirty days before the meeting.

Subject to the Special Regulations and the Mandatory Provisions, such notice shall be delivered to all the shareholders forty five days in advance, and the matters to be considered at the meeting shall be specified. Subject to the Special Regulations and the Mandatory Provisions, the confirmation letter of the shareholders planning to attend the meeting shall be delivered to the company twenty days in advance of the meeting. Moreover, subject to the Special Regulations, shareholders holding more than 5% of the company’s shares may put forward a new proposal in writing for discussion at the shareholder’s annual meeting, and if the proposal falls within the purview of the meeting, it shall be placed on the agenda of that meeting.

Shareholders present at a shareholders’ general meeting have one vote for each share they hold, save that shares held by the company are not entitled to any voting rights. Resolutions of the shareholders’ general meeting must be adopted by more than half of the voting rights held by shareholders present at the meeting, with the exception of matters relating to amendments to the articles of association, increases or decrease registered capital, merger, division, dissolution of a company or, which must be adopted by more than two-thirds of the voting rights held by the shareholders present at the meeting.

Where the PRC Company Law and the articles of association provide that the transfer or acquisition of significant assets or the provision of external guarantees by a company must be approved by way of resolution of the shareholders’ general meeting, the directors shall convene a shareholders’ general meeting promptly to vote on the above matters.

The accumulative voting system may be adopted pursuant to the provisions of the articles of association or a resolution of the shareholders’ general meeting for the election of directors and supervisors at the shareholders’ general meeting. Under the accumulative voting system, each share shall be entitled to votes equivalent to the number of directors or supervisors to be elected at the shareholders’ general meeting and shareholders may consolidate their voting rights when casting a vote.

According to the Mandatory Provisions, the increase or reduction of share capital, the issue of shares of any class, warrants or other similar securities, and bonds or debentures, the liquidation of the company and any other matters in respect of which the shareholders by ordinary resolution so decide, must be approved through special resolutions by more than two-thirds of the voting rights held by shareholders present at the meeting.

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A shareholder may entrust a representative to attend a general meeting on his behalf. The representative shall present a power of attorney issued by the shareholder to the company and shall exercise his voting rights within the authorization scope. The PRC Company Law does not specify the number of shareholders attending the general meeting. However, the Special Provisions and Mandatory Provisions specify that a company may hold a general meeting if it receives replies from shareholders concerning the said general meeting 20 days prior to the date of the meeting, and the number of voting shares represented by such shareholders amounts to more than 50% of the company’s total voting shares. Where the number of voting shares represented by such attending shareholders does not reach 50% of the company’s total voting shares, the company shall, within five days from the deadline for reply, notify the shareholders again of the issues to be considered, the time and place of the meeting in the form of public announcements. The company may then convene a general meeting after such announcements have been made. The Mandatory Provisions specifies that a class general meeting shall be held if the rights of classified shareholders are changed or abolished. Holders of domestic shares and overseas listed foreign shares are deemed to be different classes of shareholders.

A general meeting shall make the minutes for the decisions about the matters discussed at the meeting. The presider of the meeting and the directors in presence shall affix their signatures to the minutes, which shall be preserved together with the book of signatures of the shareholders in presence as well as the power of attorney thereof.

Directors

A company shall have a board of directors, which shall consist of five to 19 members. Members of the board of directors may include staff representatives of the company, who shall be democratically elected by the company’s staff at the staff representative assembly, general staff meeting or otherwise. The term of a director shall be stipulated in the articles of association, provided that no term of office shall last for more than three years. A director may serve consecutive terms if re-elected. A director shall continue to perform his duties in accordance with the laws, administrative regulations and articles of association until a re-elected director takes office, if re-election is not conducted in a timely manner upon the expiry of his term of office or if the resignation of directors results in the number of directors being less than the quorum.

Under the PRC Company Law, the board of directors exercises the following powers:

(i) to convene the shareholders’ general meetings and report on its work to the shareholders’ general meetings;
(ii) to implement the resolutions passed in general meetings;
(iii) to decide on the company’s business plans and investment proposals;
(iv) to formulate the company’s proposed annual financial budget and final accounts;
(v) to formulate the company’s profit distribution proposals and for recovery of losses;

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

(vi) to formulate proposals for the increase or reduction of the company’s registered capital and the issuance of corporate bonds;
(vii) to prepare plans for the merger, division, dissolution of the company or change of the company form;
(viii) to decide on the company’s internal management structure;
(ix) to appoint or dismiss the company’s general manager and based on the general manager’s recommendation, to appoint or dismiss the deputy general managers and financial officers of the company and to decide on their remuneration;
(x) to formulate the company’s basic management system; and
(xi) to exercise any other power under the articles of association.

The Mandatory Provisions specifies that the board of directors shall also be responsible for working out and amending the proposal of articles of association of the company.

Meetings of the board of directors shall be convened at least twice a year. Notice of meeting shall be given to all directors and supervisors ten days before the meeting. Interim board meetings may be convened by shareholders representing more than 10% of voting rights, more than one third of the directors or the supervisory board. The chairman shall convene and preside over such meeting within ten days after receiving such proposal. The board of directors may provide for a different method of giving notice and notice period for convening an extraordinary meeting of the board of directors. Meetings of the board of directors shall be held only if half or more of the directors are present. Resolutions of the board of directors require the approval of more than half of all directors. Each director shall have one vote for resolutions to be approved by the board of directors. Directors shall attend board meetings in person. If a director is unable to attend a board meeting, he may appoint another director by a written power of attorney specifying the scope of the authorization to attend the meeting on his behalf.

If a resolution of the board of directors violates the law, administrative regulations or the company’s articles of association, and as a result of which the company sustains serious losses, the directors participating in the resolution are liable to compensate the company. However, if it can be proved that a director expressly objected to the resolution when the resolution was voted on, and that such objections were recorded in the minutes of the meeting, such director may be relieved from that liability.

Under the PRC Company Law and the Mandatory Provisions, the following persons may not serve as a director of a company:

(i) persons without civil capacity or with restricted civil capacity;
(ii) persons who have committed the offence of corruption, bribery, taking of property, misappropriation of property or destruction of the social economic order, and have been

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

sentenced to criminal punishment, where less than five years have elapsed since the date of completion of the sentence; or persons who have been deprived of their political rights due to criminal offence, where less than five years have elapsed since the date of the completion of implementation of this deprivation;

(iii) persons who are former directors, factory managers or managers of a company or enterprise which has become bankrupt and has been liquidated and who are personally liable for the bankruptcy of such company or enterprise, where less than three years have elapsed since the date of the completion of the bankruptcy and liquidation of the company or enterprise;
(iv) persons who were legal representatives of a company or enterprise which had its business license revoked due to violation of the law and who are personally liable, where less than three years have elapsed since the date of the revocation of the business license;
(v) persons who have a relatively large amount of debts due and outstanding; and
(vi) Other circumstances under which a person is disqualified from acting as a director of a company are set out in the Mandatory Provisions.

The election, appointment or engagement of directors elected or appointed by the company in violation of the aforesaid provisions shall be null and void. If one of these restrictions becomes applicable to a director during his term of office, such director shall be released of his duties by the company.

The board of directors shall appoint a chairman and may appoint a vice chairman. The chairman and the vice chairman are elected with approval of more than half of all the directors. The chairman shall convene and preside over board meetings and examine the implementation of board resolutions. The vice chairman shall assist in the work of the chairman. In the event that the chairman is not performing his duties, the duties shall be performed by the vice chairman. In the event that the vice chairman is incapable of performing or not performing his duties, a director nominated by more than half of directors shall perform his duties.

Supervisors

A company shall have a supervisory board composed of not less than three members. The supervisory board consists of representatives of the shareholders and an appropriate proportion of representatives of the company’s staff. The actual proportion shall be determined in the articles of association, provided that the proportion of representatives of the company’s staff shall not be less than one-third and directors and members of the senior management may not act concurrently as supervisors. Representatives of the company’s staff at the supervisory board shall be democratically elected by the company’s staff at the staff representative assembly, general staff meeting or otherwise.

The supervisory board shall appoint a chairman and may appoint a vice chairman. The chairman and the vice chairman of the supervisory board shall be elected by more than half of all the supervisors. According to the Reply of the Overseas Listing Department of CSRC and the Production System Department of the State Commission for Restructuring the Economic System on Opinions

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Concerning the Supplement and Amendment to Articles of Association by Companies to Be Listed in Hong Kong 《中國證監會海外上市部、國家體改委生產體制司關於到香港上市公司對公司章程作補( 充修改的意見的函》), the chairman of the supervisory board shall be elected with approval of more than two-thirds of all the supervisors. The chairman of the supervisory board shall convene and preside over supervisory board meetings. In the event that the chairman of the supervisory board is incapable of performing or not performing his/her duties, the vice chairman of the supervisory board shall convene and preside over supervisory board meetings. In the event that the vice chairman of the supervisory board is incapable of performing or not performing his/her duties, a supervisor nominated by more than half of supervisors shall convene and preside over supervisory board meetings.

Each term of office of a supervisor is three years and he or she may serve consecutive terms if reelected. A supervisor shall continue to perform his/her duties in accordance with the laws, administrative regulations and articles of association until a duly re-elected supervisor takes office, if re-election is not conducted in a timely manner upon the expiry of his/her term of office or if the resignation of supervisors results in the number of supervisor being less than the quorum.

The supervisory board exercises the following powers:

(i) to review the company’s financial position;
(ii) to supervise the directors and senior management in their performance of their duties and to propose the removal of directors and senior management who have violated laws, regulations, the articles of association or shareholders’ resolution;
(iii) when the acts of directors and senior management are harmful to the company’s interests, to require correction of these acts;
(iv) to propose the convening of extraordinary shareholders’ general meetings and to convene and preside over shareholders’ meetings when the board of directors fails to perform the duty of convening and presiding over shareholders’ meeting under the PRC Company Law;
(v) to submit proposals to the shareholders’ general meetings;
(vi) to bring actions against directors and members of senior management; and
(vii) to exercise any other authority stipulated in the articles of association.

The aforesaid circumstances causing people unqualified for serving as directors of a company shall also apply to the supervisors of a company.

Supervisors may be in attendance at board meetings and make enquiries or proposals in respect of board resolutions. The supervisory board or (where there is no supervisory board) the supervisors of a company may initiate investigations into any irregularities identified in the operation of the company and, where necessary, may engage an accounting firm to assist in their work at the company’s expense.

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Manager and Senior Management

A company shall have a manager who shall be appointed or removed by the board of directors. The manager shall reports to the board of directors and may exercise his/her powers:

(i) to supervise the production, business and administration of the company and arrange for the implementation of resolutions of the board of directors;
(ii) to organize and implement the annual business plans and investment proposals of the company;
(iii) to formulate proposals for the establishment of the company’s internal management organs;
(iv) to formulate the fundamental management system of the company;
(v) to formulate the company’s specific rules and regulations;
(vi) to recommend the appointment or dismissal of any deputy manager and any financial officer;
(vii) to appoint or dismiss management personnel (other than those required to be appointed or dismissed by the board of directors); and
(viii) to exercise any other authority granted by the board or the articles of association.

Other provisions in the articles of association on the general manager’s powers shall also be complied with. The general manager shall be present at meetings of the board.

According to the PRC Company Law, senior management refers to the general manager, deputy manager, financial officer, secretary to the board of directors of a listed company and other personnel as stipulated in the articles of association.

The aforesaid circumstances causing people unqualified for serving as directors of a company shall also apply to the managers and other senior management of a company.

Duties of Directors, Supervisors, General Managers and Other Senior Management

Directors, supervisors, managers and senior management of a company are required under the PRC Company Law to comply with the relevant laws, regulations and the articles of association, and carry out their duties honestly and diligently. Directors, supervisors, managers and senior management are prohibited from abusing their powers to accept bribes or other unlawful income and from misappropriating the company’s properties. Directors and senior management are prohibited from:

(i) misappropriating company funds;

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(ii) depositing company funds into accounts under their own names or the names of other individuals;
(iii) lending company funds to others or providing guarantees in favor of others against company property in violation of the articles of association or without prior approval of the shareholders’ meeting, the general meeting or the board of directors;
(iv) entering into contracts or transactions with the company in violation of the articles of association or without prior approval of the shareholders’ meeting, the general meeting or board of directors;
(v) using their position and powers to procure business opportunities for themselves or others that should have otherwise been available to the company or operating for their own benefit or operating on behalf of others’ businesses similar to that of the company without prior approval of the shareholders’ meeting or the general meeting;
(vi) accepting for their own benefit commissions from a third party dealing with the company;
(vii) unauthorized divulgence of confidential information of the company; and
(viii) any other acts in violation of their fiduciary duty towards the company.

Income generated by directors or senior management in violation of the foregoing provisions shall be reverted to the company.

A director, supervisor or member of senior management who contravenes any law, regulation or the company’s articles of association in the performance of his/her duties resulting in any loss to the company shall be liable to the company for compensation.

Where the attendance of a director, supervisor or member of senior management is requested by the general meeting, such director, supervisor or member of senior management shall attend the meeting as requested and answer enquiries from shareholders.

Directors and senior management should furnish with all truthful facts and information to the supervisory board or the supervisors (for companies with limited liability that do not have a supervisory board) without impeding the discharge of duties by the supervisory board or the supervisors.

The Special Regulations and the Mandatory Provisions provide that a company’s directors, supervisors, general managers and other members of senior management shall have fiduciary duties towards the company. They are required to faithfully perform their duties, to protect the interests of the company and not to use their positions for their own benefit. The Mandatory Provisions contain detailed stipulations on these duties.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Finance and Accounting

A company shall establish its own financial and accounting systems according to the laws, administrative regulations and the requirements of the financial departments of the State Council. At the end of each financial year, a company shall prepare a financial and accounting report which shall be audited by an accounting firm in accordance with the laws.

The financial and accounting reports shall be prepared in accordance with the laws, administrative regulations and the requirements of the financial departments of the State Council. The financial and accounting report of a liability limited company shall be delivered to all the shareholders within the time limit stipulated in the company’s articles. A joint stock limited liability company shall deposit its financial and accounting report at the company for inspection by the shareholders at least 20 days before the convening of an annual general meeting of shareholders. A joint stock limited liability company issuing its shares in public must publish its financial and accounting report.

When distributing each year’s profits after taxation, the company shall set aside 10% of its profits after taxation for the company’s statutory common reserve fund until the fund has reached 50% of the company’s registered capital. When the company’s statutory common reserve fund is not sufficient to make up for the company’s losses for the previous years, the current year’s profits shall first be used to make good the losses before any allocation is set aside for the statutory common reserve fund. After the company has made allocations to the statutory common reserve fund from its profits after taxation, it may, with the approval of the shareholders’ meeting or the general meeting by way of resolution, make further allocations from its profits after taxation to the discretionary common reserve fund. After the company has made good its losses and made allocations to its common reserve fund, the remaining profits after taxation shall be distributed in proportion to the number of shares held by the shareholders, except for those which are not distributed in a proportionate manner as provided by the articles of association. Profit distributed to shareholders by the shareholders’ meeting or general meeting or the board of directors before losses have been made good and appropriations have been made to the statutory commons reserve fund in violation of the foregoing provisions must be returned to the company. Company shares held by the company shall not be entitled to any distribution of profit.

The premium over the nominal value of the shares of the company in issue and other income as required by the financial departments of the State Council to be treated as the capital reserve fund shall be accounted for as capital reserve fund. The common reserve fund of a company shall be applied to make good the company’s losses, expand its business operations or increase its capital. The capital reserve fund, however, shall not be used to make good the company’s losses. Upon the transfer of statutory common reserve fund into capital, the balance of the fund shall not be less than 25% of the registered capital of the company before such transfer.

The company shall have no other accounting books except the statutory accounting books. The company’s assets shall not be deposited in any accounts opened under the name of an individual.

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Appointment and Retirement of Auditors

Pursuant to the PRC Company Law, the appointment or dismissal of an accounting firm responsible for the company’s auditing shall be determined by shareholders at a shareholders’ meeting, general meeting or the board of directors in accordance with the articles of association. The accounting firm should be allowed to make representations when the shareholders’ meeting, general meeting or the board of directors conducts a vote on the dismissal of the accounting firm on their respective meetings. The company should provide true and complete accounting evidence, accounting books, financial and accounting reports and other accounting information to the newly-engaged accounting firm without any refusal or withholding or falsification of information.

The Special Regulations require a company to engage an independent qualified accounting firm to audit the company’s annual reports and to review and check other financial reports of the company. The auditor’s term of office shall commence from the end of the annual general meeting to the end of the next annual general meeting.

Where the company dismisses or discontinues the engagement of the accounting firm providing auditing services for it, according to the Special Provisions, the company shall give a notice to the said accounting firm in advance, and the accounting firm shall have the right to state its opinions at the general meeting. The company’s appointment, dismissal or disengagement of the accounting firm shall be decided at the general meeting and shall be filed with CSRC.

Profit Distribution

According to the PRC Company Law, the company shall not distribute profits before making up losses and drawing statutory common reserve. The Special Provisions specifies that the dividends and other allocations paid by the company to holders of overseas listed foreign shares shall be declared and stated in Renminbi and paid in foreign currency.

According to the Mandatory Provisions, the company shall appoint receiving agents on behalf of holders of the overseas-listed foreign invested shares to receive on behalf of such shareholders dividends and other distributions payable in respect of their overseas-listed foreign invested shares.

Amendment to the Articles of Association

Amendment to the articles of association shall follow procedures specified in laws, regulations and the articles of association. According to the Mandatory Provisions, if any amendment to provision set out in the articles of association involves any content of Mandatory Provisions, the said amendment shall be subject to approval by the CSRC and the company’s approval department authorized by the State Council and filed with the State Administration of Industry and Commerce or any of its local bureaus for registration. If the amendment to the articles of association needs to be registered and filed and has been adopted, the company must process registration of changes in accordance with applicable laws and regulations.

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Dissolution and Liquidation

According to the PRC Company Law, a company may be dissolved under one of the following circumstances:

(i) The term of business operation as prescribed by the articles of association expires or any of the situations for dissolution prescribed in the company’s articles of association occurs;
(ii) The general meeting decides to dissolve the company;
(iii) It is necessary to be dissolved due to merger or split-up of the company;
(iv) The business license is cancelled, or it is ordered to close down or to be dissolved according to laws; or
(v) Where any company meets any serious difficulty in its operations or management that cannot be resolved through other means, so that the interests of the shareholders will face heavy loss if the company continues to exist and the difficulty cannot be solved by any other means, the shareholders who hold 10% or more of the voting rights of all the shareholders of the company may request the people’s court to dissolve the company, in response to which the people’s court dissolves the company.

In the event of paragraph (i) above, the company may carry on its existence by amending its articles of association. The amendment of the articles of association in accordance with provisions set out in the previous paragraph shall require approval of shareholders holding more than two-thirds of voting rights in the case of companies with limited liability and more than two-thirds of voting rights held by shareholders attending a general meeting in the case of a joint stock limited liability company.

Where the company is dissolved in the circumstances described in (i), (ii), (iv) or (v) above, a liquidation committee shall be established within 15 days for liquidation after the occurrence of an event of dissolution.

Members of the liquidation committee of a joint stock limited liability company shall be composed of its directors or the person appointed by the shareholders’ general meeting. If a liquidation committee is not established within the stipulated period, the company’s creditors can apply to the people’s court, requesting the court to appoint relevant personnel to form a liquidation committee. The people’s court should accept such application and form a liquidation committee to conduct liquidation in a timely manner.

The liquidation committee shall exercise the following powers during the liquidation period:

(i) to dispose of the company’s assets and to prepare a balance sheet and an inventory of the assets;
(ii) to notify creditors or issue public notices;

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

(iii) to deal with the company’s outstanding businesses related to liquidation;

(iv) to pay any tax overdue as well as tax amounts arising from the process of liquidation;

(v) to claim credits and to pay off debts;
(vi) to dispose of the remaining assets of the company after its debts have been paid off; and
(vii) to represent the company in any civil procedures.

The liquidation committee shall notify the company’s creditors within ten days after its establishment, and issue public notices in the newspapers within 60 days. A creditor shall lodge his/her claim with the liquidation committee within 30 days after receiving notification or within 45 days of the public notice if he does not receive any notification. A creditor shall state all matters relevant to his/her creditor rights in making his/her claim and furnish evidence. The liquidation committee shall register such creditor rights. The liquidation committee shall not make any debt settlement to creditors during the period of claim.

Upon disposal of the company’s property and preparation of the balance sheet and inventory of assets, the liquidation committee shall draw up a liquidation plan and submit it to the shareholders’ meeting, general meeting or people’s court for endorsement.

The remaining assets of the company, after payment of liquidation expenses, employee wages, social insurance expenses and statutory compensation, outstanding taxes and the company’s debts, shall be distributed to shareholders in proportion to capital contributed by them (in the case of companies with limited liability) or in proportion to shares held by them (in the case of a joint stock limited liability company). The company shall continue to exist during the liquidation period, but can only engage in operating activities that are related to the liquidation. The company’s property shall not be distributed to shareholders before repayments are made in accordance with the requirements described above.

Upon disposal of the company’s property and preparation of the balance sheet and inventory of assets, if the liquidation committee becomes aware that the company does not have sufficient assets to meet its liabilities, it must apply to a people’s court for a declaration of bankruptcy immediately.

Following such declaration of bankruptcy, the liquidation committee shall hand over all matters related to the liquidation to the people’s court.

Upon completion of the liquidation, the liquidation committee shall submit a liquidation report to the shareholders’ meeting, general meeting or a people’s court for confirmation. Following such confirmation, the report shall be submitted to the companies’ registration authority to apply for cancelling the company’s registration, and an announcement of its termination shall be published.

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None of the members of the liquidation committee shall take advantage of his/her position to take any bribe or any other illegal proceeds, nor may he misappropriate any of the company’s property. Where any member of the liquidation committee causes any loss to the company or any creditor by intention or due to gross negligence, he/she shall make respective compensations.

Overseas Listing

According to the Special Provisions, the overseas listing of the company’s shares shall be subject to the approval of CSRC and follow procedures specified by the State Council.

Regulatory Guideline in relation to Offshore Issuance of Shares by Companies Limited by Shares and Documents and Approval Procedure for Application for Listing 《關於股份有限公司境外發行股( 票和上市申報文件及審核程序的監管指引》) which was promulgated by the CSRC on December 20, 2012 and became effective on January 1, 2013 requires that limited companies established in accordance with the PRC Company Law shall proactively submit an application to the CSRC for the issue and listing of shares outside China in compliance of the listing conditions of the overseas listing places. The CSRC will accept, review and make an administrative approval for application for administrative permission submitted by a company. The company may upon receipt of the acceptance notice submit to overseas securities regulatory authority or stock exchange a preliminary application for stock issuance and listing, and may upon receipt of the approval document for administrative licensing from CSRC submit to overseas securities regulatory authority or stock exchanges a formal application for stock issuance and listing. The approval from the CSRC is valid for 12 months from the issuance date.

Loss of H share certificates

The Special Regulations and the Mandatory Provisions provide that in the case of loss of share certificates by the shareholders of overseas listed foreign invested shares, an application for the issue of replacement certificates may be handled in accordance with the law or rules of the securities exchanges or other relevant regulations of the place where the original copy of the register of shareholders of overseas listed foreign invested shares is kept.

Suspension and termination of listing

The Securities Law provides that where a company is in one of the following circumstances, the stock exchange shall decide to suspend the listing and trading of its shares:

(i) there is a change in the total share capital, equity distribution, etc., of the company and the listing conditions are no longer fulfilled;
(ii) the company fails to disclose its financial status as required, or there are falsehoods in the financial and accounting reports that may mislead investors;
(iii) the company has committed a major breach of the law;
(iv) the company has suffered continuous losses for the most recent three years; or

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(v) other circumstances stipulated by the listing rules of the relevant stock exchange.

In the event that the conditions for listing are not satisfied within the period stipulated by the relevant stock exchange as described in (i) above, or the company has refused to rectify the situation in the case described in (ii) above, or the company fails to become profitable in the next subsequent year in the case described in (iv) above, or the company is dissolved or declared bankrupt, the relevant stock exchange shall have the right to terminate the listing of the shares of the company.

The Company Law provides that the securities administration department of the State Council may also terminate the listing of a company’s shares in the event that the company resolves to cease operation or is so instructed by its government supervisory body, or the company is declared bankrupt. In such event, the Securities Law would regard this as “other circumstances as required by the listing rules of the relevant stock exchanges.”

Merger and Split-up

The merger or split-up of the company shall be approved by votes representing more than two-thirds of voting rights held by the shareholders present at the meeting.

To carry out a merger, the credits and debts of the companies involved shall be succeeded by the company that survives the merger or by the newly established company. If an absorption merger is adopted, the company being absorbed shall be dissolved. If two companies merge to establish a new company, the two companies being merged shall be dissolved.

Laws, Regulations and Regulatory System on Securities

Since 1992, China has promulgated multiple regulations related to stock issuance, transaction and information disclosure. In October 1992, the State Council set up the Securities Commission of the State Council and CSRC. The Securities Committee is responsible for co-coordinating the drafting of relevant securities laws and regulations, formulating securities related policies, planning the development of securities markets, directing, coordinating and supervising all securities-related institutions in the PRC and administering the CSRC. The CSRC is the regulatory body of the Securities Committee and is responsible for the drafting of regulatory provisions of securities markets, supervising securities companies, regulating public offers of securities by PRC companies in the PRC or overseas, regulating the trading of securities, compiling securities related statistics and undertaking research and analysis. In 1998, the State Council decided to cancel the Securities Commission of the State Council and have its functions borne by CSRC.

On December 25, 1995, the State Council promulgated Regulations of the State Council on Domestic Listing of Foreign-oriented Stocks by Share-holding Companies 《國務院關於股份制有限( 公司境內上市外資股的規定》), which mainly specifies distributions including issuance, subscription, trading, dividend declaration of domestically listed foreign-oriented stocks, and information disclosure of share-holding companies with domestically listed foreign-oriented stocks.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

On December 29, 1998, the Standing Committee of the National People’s Congress promulgated Securities Law of the People’s Republic of China, which became effective on July 1, 1999. It is the first national securities law of China, and a fundamental law comprehensively regulating the activities on China’s stock market. The Securities Law of the People’s Republic of China underwent four revisions on August 28, 2004, October 27, 2005, June 29, 2013 and August 31 2014 respectively. The Securities Law of the People’s Republic of China shall apply to the issuance and trading of stocks, corporate bonds as well as any other securities as lawfully recognized by the State Council within China, and it shall regulate the issuance and trading of stocks, acquisition of listed companies, duties and responsibilities of stock exchanges, securities companies and securities regulatory authorities of the State Council.

Regulatory Guidelines in Relation to the Document Submission and Review Procedure for Stocks Issuance and Overseas Listing by Joint Stock Companies 《關於股份有限公司境外發行股票和上市申( 報文件及審核程序的監管指引》) promulgated by CSRC on December 20, 2012 specifies issues such as documents to be submitted and approval procedures for companies to apply for overseas listing.

Where there is no such provision in the present Law, the provisions of the PRC Company Law and other relevant laws and administrative regulations shall apply.

Arbitration and Enforcement of Arbitral Awards

The Arbitration Law of the PRC 《中華人民共和國仲裁法》( ) (the “Arbitration Law”) was passed by the Standing Committee of the NPC on August 31 ,1994, and became effective on September, 1 1995 and amended on August 27, 2009. It is applicable to contract disputes and other property disputes between natural persons, legal persons and other organizations where the parties have entered into a written agreement to refer the matter to arbitration before an arbitration committee constituted in accordance with the Arbitration Law. Under the Arbitration Law, an arbitration committee may, before the promulgation by the PRC Arbitration Association of arbitration regulations, formulate interim arbitration rules in accordance with the Arbitration Law and the PRC Civil Procedure Law 《中國民( 事訴訟法》). Where the parties have by agreement provided arbitration as the method for dispute resolution, the people’s court will refuse to handle the case.

Under the Arbitration Law and the PRC Civil Procedure Law, an arbitral award is final and binding on the parties. If a party fails to comply with an award, the other party to the award may apply to the people’s court for enforcement. A people’s court may refuse to enforce an arbitral award made by an arbitration tribunal if there is any procedural or membership irregularity specified by law or the award exceeds the scope of the arbitration agreement or is outside the jurisdiction of the arbitration tribunal.

A party seeking to enforce an arbitral award of a PRC arbitration panel against a party who, or whose property, is not within the PRC, may apply to a foreign court with jurisdiction over the case for enforcement. Similarly, an arbitral award made by a foreign arbitration body may be recognized and enforced by the PRC courts in accordance with the principles of reciprocity or any international treaty concluded or acceded to by the PRC. The PRC acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 《承認及執行外國仲裁裁決公約》( ) (the “New York Convention”) adopted on June 10,1958 pursuant to a resolution of the Standing Committee of the NPC

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passed on December 2,1986. The New York Convention is effective for the PRC on April 22, 1987. The New York Convention provides that all arbitral awards made in a state which is a party to the New York Convention shall be recognized and enforced by other parties to the New York Convention, subject to their right to refuse enforcement under certain circumstances, including where the enforcement of the arbitral award is against the public policy of the State to which the application for enforcement is made. It was declared by the Standing Committee of the NPC simultaneously with the accession of the PRC that (i) the PRC will only recognize and enforce foreign arbitral awards on the principle of reciprocity; and (ii) the PRC will only apply the New York Convention to disputes considered under PRC laws to have arisen from contractual mercantile legal relations.

In June 1999, Arrangement of the Supreme People’s Court on Mutual Enforcement of Arbitration Awards between the Mainland and Hong Kong 《最高人民法院關於內地與香港特別行政區相互執行( 仲裁裁決的安排》) was made between Hong Kong and the Supreme People’s Court of the PRC for the mutual enforcement of arbitral awards. This new arrangement was approved by the Supreme People’s Court of the PRC and the Hong Kong Legislative Council, and became effective on February 1, 2000. The arrangement is made in accordance with the spirit of the New York Convention. Under the arrangement, awards made by PRC arbitration bodies pursuant to the Arbitration Law can be enforced in Hong Kong. Hong Kong arbitral awards pursuant to the Arbitration Ordinance of Hong Kong are also enforceable in the PRC.

Judicial judgment and its enforcement

Under the Arrangement of the Supreme People’s Court between the Courts of the Mainland and the Hong Kong on Mutual Recognition and Enforcement of Judgments of Civil and Commercial Cases under the Jurisdiction as Agreed to by the Parties Concerned 《最高人民法院關於內地與香港特別行( 政區法院相互認可和執行當事人協議管轄的民商事案件的安排》) issued by the Supreme People’s court on July 3, 2008 and became effective on August 1, 2008, in the case of final judgment, defined with payment amount and enforcement power, made between mainland court and Hong Kong SAR court in civil and commercial case with written jurisdiction agreement, the parties concerned shall apply to mainland people’s court or Hong Kong SAR court for recognition and enforcement based on this arrangement. “Choice of court agreement in written” in this arrangement refers to a written agreement defining the exclusive jurisdiction of either the mainland people’s court or Hong Kong SAR in order to revolve dispute with particular legal relation occurred or likely to occur by the parties concerned since effective date of this arrangement. Accordingly, the parties concerned may apply to the courts in mainland or Hong Kong to recognize and enforce the final judgment made by the courts in Hong Kong or the Mainland that meet certain conditions under this arrangement.

Overseas Investment

Pursuant to the Administrative Measures for Approval and Record-filing on Overseas Investment Projects 《境外投資項目核准和備案管理辦法》( ), which was promulgated by the NDRC on April 8,2014 and became effective from May 8,2014, the State adopts approval administration and record-filing administration for overseas investment projects respectively according to different circumstances. Any overseas investment project with the Chinese party’s investment amount of not less than USD 1 billion is to be approved by the NDRC. An overseas investment project that involves any sensitive country or region or any sensitive industry, irrespective of the limit of investment

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amount, is to be approved by the NDRC. Under the circumstances, with regard to an overseas investment project that has the Chinese party’s investment amount of not less than USD 2 billion and involves any sensitive country or region or any sensitive industry, the NDRC is to put forward the examination and verification opinion thereon and report the same to the State Council for approval. Overseas investment projects other than those that require approval referred above are subject to filing management. In particular, where the overseas investment projects are implemented by a central enterprise with US$3 billion or above invested by the Chinese party of the local enterprise, such projects shall be filed by the NDRC. For overseas investment projects with less than US$3 billion invested by the Chinese party of the local enterprise, such projects shall be filed by the provincial level competent investment authorities including the level of province, autonomous region, directly administrated municipality or municipality with independent planning and Xinjiang Production and Construction Corps. Any change with respect to the size, nature or an investor of or the equity holding in an approved overseas investment project, as well as any change to the amount invested by Chinese investors that exceeds 20% of the investment amount originally approved or filed must be approved by the NDRC or its provincial counterparts.

According to the Measures for Overseas Investment Management 《境外投資管理辦法》( ) promulgated on September 6, 2014 by the Ministry of Commerce of the PRC (“MOFCOM”) and effective from October 6, 2014, the filing and approval management will be applied by MOFCOM and the provincial commerce administrative department according to different situations of enterprise overseas investments. The approval management will be applied where the enterprise overseas investments involving in sensitive countries and regions as well as sensitive sectors. The filing management will be applied in other cases of enterprise overseas investments.

According to Notice of the State Council on Release of the List of Government Approved Investment Projects (2014) 《政府核准的投資項目目錄（( 2014年本）》) promulgated by the State Council on October 31, 2014, investment projects involving sensitive countries and regions or sensitive industries shall be approved by competent department for investment under the State Council. Other outbound investments of US$300 million or above by centrally governed enterprises and local enterprises are required to be filed with the competent department for investment under the State Council.

According to Provisions on the Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions 《境內機構境外直接投資外匯管理規定》( ) which was promulgated by SAFE on July 13, 2009 and became effective as from August 1, 2009, Chinese enterprises approved to directly invest overseas shall register the foreign exchange for their direct overseas investment with the foreign exchange authority.

HONG KONG LAWS AND REGULATIONS

(a) Summary of Material Differences between Hong Kong and PRC Company Law

The Hong Kong law applicable to a company incorporated in Hong Kong is based on the Companies Ordinance and supplemented by common law and rules of equity that apply to Hong Kong. Our Company, which is a joint stock limited company established in the PRC, is governed by the PRC Company Law and all other rules and regulations promulgated pursuant to the PRC Company Law.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Set out below is a summary of the material differences between the Hong Kong company law applicable to a company incorporated in Hong Kong and the PRC Company Law applicable to a joint stock limited company incorporated and existing under the PRC Company Law. This summary is, however, not intended to be an exhaustive comparison.

(i). Corporate existence

Under the Companies Ordinance, a company having share capital, is incorporated and will acquire an independent corporate existing after the Registrar of Companies of Hong Kong issuing a certificate of incorporation. A company may be incorporated as a public company or a private company. Pursuant to the Companies Ordinance the articles of association of a private company incorporated in Hong Kong shall contain provisions restricting the transfer of its shares, e.g. pre-emptive provisions. A public company’s articles of association ought not to contain such restrictive provisions.

Under the PRC Company Law, a joint stock limited company may be incorporated by promotion or public subscription.

Hong Kong law does not prescribe any minimum capital requirement for a Hong Kong company. There is no minimum monetary contribution restriction on a Hong Kong company under Hong Kong law.

(ii). Share capital

Under Hong Kong law, the authorized share capital of a Hong Kong company is the amount of share capital which the company is authorized to issue and a company is not bound to issue the entire amount of its authorized share capital. The authorized share capital may be larger than its issued share capital. Hence, the directors of a Hong Kong company may, with the prior approval of the shareholders, if required, cause the company to issue new shares. The PRC Company Law does not provide for authorized share capital other than registered capital. The registered capital of a joint stock limited company is the amount of the issued share capital. Any increase in registered capital must be approved by the shareholders in a general meeting and by the relevant PRC governmental and regulatory authorities when applicable.

Under the PRC Law, a company which is authorized by the relevant securities administration authority to list its shares on a stock exchange must have a registered capital of not less than RMB30 million. Hong Kong law does not prescribe any minimum capital requirements for companies incorporated in Hong Kong.

Under the PRC Company Law, the shares may be subscribed for in the form of money or non-monetary assets that may be valued in currency and lawfully transferable. For non-monetary assets to be used as capital contributions, appraisals and verification must be carried out to ensure no overvaluation or under-valuation of the assets. There is no such restriction on a Hong Kong company under Hong Kong law.

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(iii) Restrictions on shareholding and transfer of shares

Under PRC law, the domestic shares in the share capital of a joint stock limited liability company which are denominated and subscribed for in Renminbi may only be subscribed or traded by the State, PRC legal and natural persons. The overseas listed foreign shares issued by a joint stock limited liability company which are denominated in Renminbi and subscribed for in a currency other than Renminbi, except as otherwise permitted under the Trial Measures for the Administration of Overseas Securities Investment by Qualified Domestic Institutional Investors (合格境內機構投資者境外證券投資管理試行辦法), may only be subscribed and traded by investors from Hong Kong Special Administrative Region, the Macau Special Administrative Region, Taiwan or any country and territory outside the PRC.

Under the PRC Company Law, shares in a joint stock limited company held by its promoters cannot be transferred within one year after the date of establishment of the company. Shares in issue prior to the company’s public offering cannot be transferred within one year from the listing date of the shares on the Hong Kong Stock Exchange. Shares in a joint stock limited company held by its directors, supervisors and managers and transferred each year during their term of office shall not exceed 25% of the total shares they held in the company, and the shares they held in the company cannot be transferred within one year from the listing date of the shares, and also cannot be transferred within half a year after the said personnel has left office. The articles of association may set other restrictive requirements on the transfer of the company’s shares held by its directors, supervisors and officers. There are no such restrictions on shareholdings and transfers of shares under Hong Kong law.

(iv) Financial assistance for acquisition of shares

Although the PRC Company Law does not contain any provision prohibiting or restricting a joint stock limited company or its subsidiaries from providing financial assistance for the purpose of an acquisition of its own or its holding company’s shares, the Mandatory Provisions contain certain restrictions on a company and its subsidiaries providing such financial assistance similar to those under the company law in Hong Kong.

(v) Variation of class rights

The PRC Company Law makes no specific provision relating to variation of class rights. However, the PRC Company Law states that the State Council can promulgate regulations relating to other kinds of shares. The Mandatory Provisions contain elaborate provisions relating to the circumstances which are deemed to be variations of class rights and the approval procedures required to be followed regarding variations of class rights. These provisions have been incorporated in the Articles of Association, which are summarized in Appendix VIII.

Under the Companies Ordinance, no rights attached to any class of shares can be varied except (i) with the approval of a special resolution of the holders of the relevant class at a separate meeting, (ii) with the consent in writing of the holders of three-fourths in nominal value of the issued shares of the class in question, (iii) by agreement of all the members of a Hong Kong company or (iv) if there are provisions in the articles of association relating to the variation of those rights, then in accordance with those provisions.

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Our Company (as required by the Listing Rules and the Mandatory Provisions) has adopted in the Articles of Association provisions protecting class rights in a similar manner to those found in Hong Kong law. Holders of overseas listed foreign invested shares and domestic shares are defined in the Articles of Association as different classes of shareholders, provided however that the special procedures for approval by separate class shareholders shall not apply to the following circumstances: (i) the Company issues domestic shares and listed foreign invested shares, separately or simultaneously, once every 12-month period, pursuant to a Shareholders’ special resolution, not more than 20% of each of the issued domestic shares and issued overseas listed foreign invested shares existing as of the date of the Shareholders’ special resolution; (ii) the plan for the issue of domestic shares and overseas listed foreign invested shares upon its establishment is implemented within 15 months following the date of approval by the CSRC; and (iii) upon approval by CSRC, the shareholders of domestic shares of the Company transfer their shares to overseas investors and such shares are listed and traded in foreign markets.

(vi) Directors

The PRC Company Law, unlike the company law in Hong Kong, does not contain any requirements relating to the declaration made by directors of the interests in material contracts; restrictions on directors’ authority in making major dispositions; restrictions on companies providing certain benefits, prohibitions against compensation for loss of office without shareholders’ approval. The PRC Company Law provides restrictions on interested directors voting on the resolution at a meeting of the board of directors when such resolution relates to an enterprise which the director is interested or connected. The Mandatory Provisions, however, contain requirements and restrictions on major dispositions and specify the circumstances under which a director may receive compensation for loss of office, all of which provisions have been incorporated in the Articles of Association, a summary of which is set out in Appendix VIII.

(vii) Supervisory Board

Under the PRC Company Law, the board of directors and managers of a joint stock limited company are subject to the supervision and inspection of a supervisory board but there is no mandatory requirement for the establishment of a supervisory board for a company incorporated in Hong Kong. The Mandatory Provisions provide that each supervisor owes a duty, in the exercise of his powers, to act in good faith and honestly in what he considers to be in the best interests of the company and to exercise the care, diligence and skill that a reasonably prudent person would exercise under comparable circumstances.

(viii) Derivative action by minority shareholders

Hong Kong law permits minority shareholders to start a derivative action on behalf of a company against directors who have committed a breach of their duties to the company, especially if such directors control a majority of votes at a general meeting, thereby effectively preventing a company from suing the directors in breach of their duties in its own name. The PRC Company Law gives shareholders of a joint stock limited company the right to initiate proceedings in the people’s court to restrain the implementation of any resolution passed by the shareholders in a general meeting, or

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by the board of directors, that violates any law or infringes the lawful rights and interests of the shareholders. The PRC Company Law also provides that the shareholder can initiate proceedings if the director or senior management of the Company violates the law, administrative regulation or articles of association of the Company and thus infringe the shareholder’s interest.

The Mandatory Provisions further provide remedies to the company against directors, supervisors and senior management in breach of their duties to the company. In addition, every director and supervisor of a joint stock limited company applying for a listing of its foreign shares on the Hong Kong Stock Exchange is required to give an undertaking in favor of the company to comply with the company’s articles of association. This allows minority shareholders to act against the directors and supervisors in default.

(ix) Protection of minorities

Under Hong Kong law, a shareholder who complains that the affairs of a company incorporated in Hong Kong are conducted in a manner unfairly prejudicial to his interests may petition to court to either wind up the company or make an appropriate order regulating the affairs of the company. In addition, on the application of a specified number of members, the Financial Secretary of the Hong Kong Government may appoint inspectors who are given extensive statutory powers to investigate the affairs of a company incorporated in Hong Kong. The PRC Company Law provides that where any company encounters any serious difficulty in its operations or management so as that the interests of the shareholders will face serious loss if the company continues to exist and such difficulty cannot be resolved by any other means, the shareholders holding ten percent or more of the voting rights of all the issues shares of the company may plead the people’s court to dissolve the company.

The Mandatory Provisions, however, contain provisions to the effect that a controlling shareholder may not exercise its voting rights to relieve a director or supervisor of his duty to act honestly in the best interests of the company or to approve the expropriation by a director or supervisor of the company’s assets or the individual rights of other shareholders which is prejudicial to the interests of the shareholders generally or of some part of the shareholders of a company.

(x) Notice of shareholders’ meetings

Under the PRC Company Law, notice of a shareholders’ general meeting must be given not less than 20 days before the meeting and notice of an extraordinary general meeting must be given not less than 15 days before the meeting, or, in the case of a company having bearer shares, a public announcement of a shareholders’ general meeting must be made at least 30 days prior to it being held. Under the Special Regulations and the Mandatory Provisions, 45 days’ written notice must be given to all shareholders and shareholders who wish to attend the meeting must reply in writing 20 days before the date of the meeting. For a company incorporated in Hong Kong, the minimum notice periods of a general meeting convened for passing an ordinary resolution and a special resolution are 14 days and 21 days, respectively. The notice period for an annual general meeting is 21 days.

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(xi) Quorum for shareholders’ meetings

Under Hong Kong law, the quorum for a general meeting is two members unless the articles of association of the company otherwise provide. For one member companies, one member will be a quorum. The PRC Company Law does not specify any quorum requirement for a shareholders’ general meeting, but the Special Regulations and the Mandatory Provisions provide that a company’s general meeting can be convened when replies to the notice of that meeting have been received from shareholders whose shares represent 50% of the voting rights in the company at least 20 days before the proposed date of the meeting. If that 50% level is not achieved, the company shall within five days notify its shareholders by public announcement and the shareholders’ general meeting may be held thereafter.

(xii) Voting

Under Hong Kong law, an ordinary resolution is passed by a simple majority of votes cast by members present in person or by proxy at a general meeting and a special resolution is passed by a majority of not less than three-fourths of votes cast by members present in person or by proxy at a general meeting. Under the PRC Company Law, the passing of any resolution requires more than one half of the votes cast by shareholders present in person or by proxy at a shareholders’ general meeting except in cases of proposed amendment to the articles of association, increase or reduction of share capital, and merger, demerger or dissolution of a joint stock limited company or changes to the company status, which require two-thirds or more of votes cast by shareholders present at a shareholders’ general meeting.

(xiii) Financial disclosure

A company is required under the PRC Company Law to make available at its office for inspection by shareholders its annual balance sheet, profit and loss account, statements of changes in financial position and other relevant annexes 20 days before the annual general meeting of shareholders. In addition, a company established by way of public subscription under the PRC Company Law must publish its financial position. The annual balance sheet has to be verified by registered accountants. The Companies Ordinance requires a company to send to every shareholder a copy of its balance sheet, auditors’ report and directors’ report, which are to be laid before the company in its annual general meeting, not less than 21 days before such meeting.

A company is required under the PRC law to prepare its financial statements in accordance with the PRC accounting standards. The Mandatory Provisions require that the company must, in addition to preparing accounts according to the PRC standards, have its accounts prepared and audited in accordance with International Accounting Standards or Hong Kong accounting standards and its financial statements must also contain a statement of the financial effect of the material differences (if any) from the financial statements prepared in accordance with the PRC accounting standards.

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The Special Regulations require that there should not be any inconsistency between the information disclosed within and outside the PRC and that, to the extent that there are differences in the information disclosed in accordance with the relevant PRC and overseas laws, regulations and requirements of the relevant stock exchanges, such differences should also be disclosed simultaneously.

(xiv) Information on directors and shareholders

The PRC Company Law gives the shareholders of a company the right to inspect the Articles of Association, minutes of the shareholders’ general meetings and financial and accounting reports.

Under the Articles of Association, Shareholders have the right to inspect and copy (at reasonable charges) certain information on shareholders and on directors similar to that available to shareholders of Hong Kong companies under Hong Kong law.

(xv) Receiving agent

Under both the PRC Company Law and Hong Kong law, dividends once declared become debts payable to shareholders. The limitation period for debt recovery action under Hong Kong law is six years, while that under the PRC law is two years.

The Mandatory Provisions require that the company should appoint a trust company registered under the Hong Kong Trustee Ordinance (Chapter 29 of the Laws of Hong Kong) as a receiving agent to receive on behalf of holders of foreign shares dividends declared and all other monies owed by a joint stock limited company in respect of such foreign shares.

(xvi) Corporate reorganization

Corporate reorganizations involving a company incorporated in Hong Kong may be effected in a number of ways, such as a transfer of the whole or part of the business or property of the company to another company in the course of being wound up voluntarily pursuant to section 237 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance or a compromise or arrangement between the company and its creditors or between the company and its members pursuant to section 166 of the Companies Ordinance which requires the sanction of the court. Under PRC Company Law, the merger, demerger, dissolution, liquidation or change to the forms of a company has to be approved by shareholders at general meeting.

(xvii) Arbitration of disputes

In Hong Kong, disputes between shareholders and a company incorporated in Hong Kong or its directors may be resolved through the courts.

The Mandatory Provisions provide that such disputes should be submitted to arbitration at either the HKIAC or the CIETAC at the claimant’s choice.

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(xviii) Mandatory deductions

Under the PRC Company Law, a company shall draw 10% of the profits as its statutory reserve fund before it declare any dividends after taxation. The company may not required to deposit the statutory reserve fund if the aggregate amount of the statutory reserve fund has accounted for 50% of the company’s registered capital. After the company has drawn statutory reserve fund from the after-tax profits, it may, upon a resolution made by the shareholders, draw a discretionary reserve fund from the after-tax profits. There are no such requirements under Hong Kong law.

(xix) Remedies of a company

Under the PRC Company Law, if a director, supervisor or manager in carrying out his duties infringes any law, administrative regulation or the articles of association of a company, which results in damage to the company, that director, supervisor or manager should be responsible to the company for such damages. In addition, the Articles of Association set out remedies of the company similar to those available under the Hong Kong law (including rescission of the relevant contract and recovery of profits made by a director, supervisor or officer) which are in compliance with the Mandatory Provisions.

(xx) Dividends

Pursuant to the relevant PRC laws and regulations, the company shall withhold, and pay to the relevant tax authorities, any tax payable under PRC law on any dividends or other distributions payable to a shareholder. Under Hong Kong law, the limitation period for an action to recover a debt (including the recovery of dividends) is six years, whereas under PRC laws, the relevant limitation period is two years. A company shall not exercise its powers to forfeit any unclaimed dividend in respect of its listed foreign shares until after the expiry of the applicable limitation period.

(xxi) Fiduciary duties

In Hong Kong, there is the common law concept of the fiduciary duty of directors. Under the PRC Company Law and the Special Regulations, directors, supervisors, senior management owe a fiduciary duty towards a company and are not permitted to engage in any activities which compete with or damage the interests of the company.

(xxii) Closure of register of shareholders

The Companies Ordinance requires that the register of shareholders of a company must not generally be closed for the registration of transfers of shares for more than 30 days (extendable to 60 days in certain circumstances) in a year, whereas the Articles of Association provide, as required by the PRC Company Law and the Mandatory Provisions, that share transfers may not be registered within 30 days before the date of a shareholders’ meeting or within five days before the record date set for the purpose of distribution of dividends.

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(b) Hong Kong Listing Rules

The Hong Kong Listing Rules provide additional requirements which apply to an issuer which is incorporated in the PRC as a joint stock limited company and seeks a primary listing or whose primary listing is on the Hong Kong Stock Exchange. Set out below is a summary of such principal additional requirements which apply to the Company.

(i) Compliance advisor

A company seeking listing on the Hong Kong Stock Exchange is required to appoint a compliance advisor acceptable to the Stock Exchange for the period from its listing date up to the date of the publication of its first full year’s financial results, to provide the company with professional advice on continuous compliance with the Hong Kong Listing Rules and all other applicable laws, regulations, rules, codes and guidelines, and to act at all times, in addition to the company’s two authorized representatives, as the principal channel of communication with the Hong Kong Stock Exchange. The appointment of the compliance advisor may not be terminated until a replacement acceptable to the Hong Kong Stock Exchange has been appointed.

If the Hong Kong Stock Exchange is not satisfied that the compliance advisor is fulfilling its responsibilities adequately, it may require the company to terminate the compliance advisor’s appointment and appoint a replacement.

The compliance advisor must keep the company informed on a timely basis of changes in the Hong Kong Listing Rules and any new or amended law, regulation or code in Hong Kong applicable to the company.

It must act as the company’s principal channel of communication with the Hong Kong Stock Exchange if the authorized representatives of the company are expected to be frequently outside Hong Kong.

(ii) Accountants’ report

An accountants’ report for a PRC issuer will not normally be regarded as acceptable by the Hong Kong Stock Exchange unless the relevant accounts have been audited to a standard comparable to that required in Hong Kong or under International Standards on Auditing or China Auditing Standards. Such report will normally be required to conform to Hong Kong or international accounting standards or China Accounting Standards for Business Enterprises.

(iii) Process agent

The Company is required to appoint and maintain a person authorized to accept service of process and notices on its behalf in Hong Kong throughout the period during which its securities are listed on the Hong Kong Stock Exchange and must notify the Hong Kong Stock Exchange of his appointment, the termination of his appointment and his contact particulars.

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(iv) Public shareholdings

If at any time there are existing issued securities of a PRC issuer other than foreign shares (“foreign shares”) which are listed on the Hong Kong Stock Exchange, the Hong Kong Listing Rules require that the aggregate amount of such foreign shares held by the public must constitute not less than 25% of the issued share capital and that such foreign shares for which listing is sought must not be less than 15% of the total issued share capital if the company has an expected market capitalization at the time of listing of not less than HK$50,000,000. The Hong Kong Stock Exchange may, at its discretion, accept a lower percentage of between 15% and 25% if the Company has an expected market capitalization at the time of listing of over HK$10,000,000,000.

(v) Independent non-executive directors and supervisors

The independent non-executive directors of a PRC issuer are required to demonstrate an acceptable standard of competence and adequate commercial or professional expertise to ensure that the interests of the general body of shareholders will be adequately represented. The supervisors of a PRC issuer must have the character, expertise and integrity and be able to demonstrate a standard of competence commensurate with their position as supervisors.

(vi) Restrictions on purchase and subscription of its own securities

Subject to governmental approvals and the provisions of the Articles of Association, the Company may repurchase its own H shares on the Hong Kong Stock Exchange in accordance with the provisions of the Hong Kong Listing Rules. Approval by way of special resolution of the holders of domestic shares and the holders of H shares at separate class meetings conducted in accordance with the Articles of Association is required for share repurchases. In seeking approvals, the Company is required to provide data on any proposed or actual purchases of all or any of its equity securities, whether or not listed or traded on the Hong Kong Stock Exchange. The Directors must also state the consequences of any purchases which will arise under either or both of the Code on Takeovers and Mergers and any similar PRC law of which the directors are aware, if any.

Any general mandate given to the directors to repurchase the foreign shares must not exceed 10% of the total amount of existing issued foreign shares of the Company.

(vii) Mandatory provisions

With a view to increasing the level of protection afforded to investors, the Hong Kong Stock Exchange requires the incorporation, in the articles of association of a PRC company whose primary listing is on the Hong Kong Stock Exchange, of the Mandatory Provisions and provisions relating to the change, removal and resignation of auditors, class meetings and the conduct of the supervisory board of the company. Such provisions have been incorporated into the Articles of Association, a summary of which is set out in Appendix VIII.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

(viii) Redeemable shares

The Company must not issue any redeemable shares unless the Hong Kong Stock Exchange is satisfied that the relative rights of the holders of the foreign shares are adequately protected.

(ix) Pre-emptive rights

Except in the circumstances mentioned below, the directors of a company are required to obtain the approval by a special resolution of shareholders in general meeting, and the approvals by special resolutions of the holders of domestic shares and foreign shares (each being otherwise entitled to vote at general meetings) at separate class meetings conducted in accordance with the Company’s articles of association, prior to (1) authorizing, allotting, issuing or granting shares or securities convertible into shares, or options, warrants or similar rights to subscribe for any shares or such convertible securities; or (2) any major subsidiary of the Company making any such authorization, allotment, issue or grant so as materially to dilute the percentage equity interest of the company and its shareholders in such subsidiary.

No such approval will be required, but only to the extent that, the existing shareholders of the company have by special resolution in general meeting given a mandate to the directors, either unconditionally or subject to such terms and conditions as may be specified in the resolution, to authorize, allot or issue, either separately or concurrently once every 12 months, not more than 20% of the existing domestic shares and foreign shares as of the date of the passing of the relevant special resolution or of such shares that are part of the company’s plan at the time of its establishment to issue domestic shares and foreign shares and which plan is implemented within 15 months from the date of approval by the CSRC; or where upon approval by securities supervision or administration authorities of State Counsel, the shareholders of domestic invested shares of the Company transfer its shares to overseas investors and such shares are listed and traded in foreign markets.

(x) Supervisors

The Company is required to adopt rules governing dealings by its Supervisors in securities of the Company in terms no less exacting than those of the model code (set out in Appendix 10 to the Hong Kong Listing Rules) issued by the Hong Kong Stock Exchange.

The Company is required to obtain the approval of its shareholders at a general meeting (at which the relevant Supervisor and his associates shall not vote on the matter) prior to the Company or any of its subsidiaries entering into a service contract of the following nature with a Supervisor or proposed Supervisor of the Company or its subsidiary: (1) the term of the contract may exceed three years; or (2) the contract expressly requires the Company to give more than one year’s notice or to pay compensation or make other payments equivalent to the remuneration more than one year.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

The remuneration and assessment committee of the Company or an independent board committee must form a view in respect of service contracts that require shareholders’ approval and advise shareholders (other than shareholders with a material interest in the service contracts and their associates) as to whether the terms are fair and reasonable, advise whether such contracts are in the interests of the Company and its Shareholders as a whole and advise Shareholders on how to vote.

(xi) Amendment to the Articles of Association

The Company is required not to permit or cause any amendment to be made to its Articles of Association which would cause the same to cease to comply with the mandatory provisions of the Hong Kong Listing Rules and the Mandatory Provisions or the PRC Company Law.

(xii) Documents for inspection

The Company is required to make available at a place in Hong Kong for inspection by the public and its Shareholders free of charge, and for copying by Shareholders at reasonable charges the following:

a complete duplicate register of shareholders;
a report showing the state of the issued share capital of the Company;
the Company’s latest audited financial statements and the reports of the Directors, auditors and Supervisors (if any) thereon;
special resolutions of the Company;
reports showing the number and nominal value of securities repurchased by the Company since the end of the last certificates year, the aggregate amount paid for such securities and the maximum and minimum prices paid in respect of each class of securities repurchased (with a breakdown between Domestic Shares and H Shares);
a copy of the latest annual return led with the administration for industry and commerce; and
for Shareholders only, copies of minutes of meetings of shareholders.

(xiii) Receiving agents

The Company is required to appoint one or more receiving agents in Hong Kong and pay to such agent(s) dividends declared and other monies owing in respect of the H Shares to be held, pending payment, in trust for the holders of such H Shares.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

(xiv) Statements in H share certificates

The Company is required to ensure that all of its listing documents and H share certificates include the statements stipulated below and to instruct and cause each of its share registrars not to register the subscription, purchase or transfer of any of its shares in the name of any particular holder unless and until such holder delivers to such share registrar a signed form in respect of such shares bearing statements to the following effect that the acquirer of shares:

agrees with the Company and each Shareholder of the Company, and the Company agrees with each shareholder of the Company, to observe and comply with the PRC Company Law, the Special Regulations, the Articles of Association and other relevant laws and administrative regulations;
agrees with the Company, each Shareholder, Director, Supervisor, manager and officer of the Company, and the Company acting for itself and for each Director, Supervisor, manager and officer of the Company agrees with each shareholder, to refer all differences and claims arising from the Articles of Association or any rights or obligations conferred or imposed by the PRC Company Law or other relevant laws and administrative regulations concerning the affairs of the Company to arbitration in accordance with the Articles of Association, and any reference to arbitration shall be deemed to authorize the arbitration tribunal to conduct hearings in open session and to publish its award. Such arbitration shall be final and conclusive;
agrees with the Company and each shareholder of the Company that the H Shares are freely transferable by the holder thereof; and
authorizes the Company to enter into a contract on his behalf with each Director, Supervisors, Managers and officer of the Company whereby each such Director and officer undertakes to observe and comply with his obligation to shareholders as stipulated in the Articles of Association.
(xv) Compliance with the PRC Company Law, the Special Regulations and the Articles of Association

The Company is required to observe and comply with the PRC Company Law, the Special Regulations and the Articles of Association.

(xvi) Contract between the Company and its Directors, officers and Supervisors

The Company is required to enter into a contract in writing with every Director and officer containing at least the following provisions:

an undertaking by the Director or officer to the Company to observe and comply with the PRC Company Law, the Special Regulations, the Articles of Association, the Codes on Takeovers and Mergers and Share Repurchases and an agreement that the Company shall have the remedies provided in the Articles of Association and that neither the contract nor his office is capable of assignment;

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

an undertaking by the Director or officer to the Company acting as agent for each shareholder to observe and comply with his obligations to shareholders as stipulated in the Articles of Association;
an arbitration clause which provides that whenever any differences or claims arise from that contract, the Articles of Association or any rights or obligations conferred or imposed by the PRC Company Law or other relevant law and administrative regulations concerning the affairs of the Company between the Company and its Directors or officers and between a holder of H Shares and a Director or officer of the Company, such differences or claims will be referred to arbitration at either the CIETAC in accordance with its rules or the HKIAC in accordance with its Securities Arbitration Rules, at the election of the claimant and that once a claimant refers a dispute or claim to arbitration, the other party must submit to the arbitral body elected by the claimant. Such arbitration will be final and conclusive;
if the party seeking arbitration elects to arbitrate the dispute or claim at HKIAC, then either party may apply to have such arbitration conducted in Shenzhen according to the Securities Arbitration Rules of HKIAC;
PRC laws shall govern the arbitration of disputes or claims referred to above, unless otherwise provided by law or administrative regulations;
the award of the arbitral body is final and shall be binding on the parties thereto;
the agreement to arbitrate is made by the Director or offer with the Company on its own behalf and on behalf of each shareholder; and
any reference to arbitration shall be deemed to authorize the arbitral tribunal to conduct hearings in open session and to publish its award. The Company is also required to enter into a contract in writing with every supervisor containing statements in substantially the same terms.

(xvii) Subsequent listing

The Company must not apply for the listing of any of its foreign shares on a PRC stock exchange unless the Hong Kong Stock Exchange is satisfied that the relative rights of the holders of foreign shares are adequately protected.

(xviii) English translation

All notices or other documents required under the Hong Kong Listing Rules to be sent by the Company to the Hong Kong Stock Exchange or to holders of H Shares are required to be in the English language, or accompanied by a certified English translation.

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APPENDIX V SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

(xix) General

If any change in the PRC law or market practices materially alters the validity or accuracy of any of the basis upon which the additional requirements have been prepared, then the Hong Kong Stock Exchange may impose additional requirements or make listing of the equity securities of a PRC issuer, including the Company, subject to special conditions as the Hong Kong Stock Exchange considers appropriate. Whether or not any such changes in the PRC law or market practices occur, the Hong Kong Stock Exchange retains its general power under the Hong Kong Listing Rules to impose additional requirements and make special conditions in respect of the Company’s listing.

(c) Other Legal and Regulatory Provisions

Upon the Company’s listing, the provisions of the Securities and Futures Ordinance, the Codes on Takeovers and Mergers and Share Repurchases and such other relevant ordinances and regulations as may be applicable to companies listed on the Hong Kong Stock Exchange will apply to the Company.

(d) Securities Arbitration Rules

The Articles of Association provide that certain claims arising from the Articles of Association or the PRC Company Law shall be arbitrated at either the CIETAC or the HKIAC in accordance with their respective rules. The Securities Arbitration Rules of the HKIAC contain provisions allowing an arbitral tribunal to conduct a hearing in Shenzhen for cases involving the affairs of companies incorporated in the PRC and listed on the Hong Kong Stock Exchange so that PRC parties and witnesses may attend.

Where any party applies for a hearing to take place in Shenzhen, the tribunal shall, where satisfied that such application is based on bona fide grounds, order the hearing to take place in Shenzhen conditional upon all parties including witnesses and the arbitrators being permitted to enter Shenzhen for the purpose of the hearing. Where a party (other than a PRC party) or any of its witnesses or any arbitrator is not permitted to enter Shenzhen, then the tribunal shall order that the hearing be conducted in any practicable manner, including the use of electronic media. For the purpose of the Securities Arbitration Rules, a PRC party means a party domiciled in the PRC other than the territories of Hong Kong, Macau and China Taiwan.

(e) PRC Legal Matter

Our PRC Legal Advisors have sent to us a legal opinion dated [●], [●] 2015 confirming that it has reviewed the summaries of relevant PRC laws and regulations as contained in this Appendix and that, in its opinion, such summaries are correct summaries relevant to PRC laws and regulations. This letter is available for inspection as referred to in “Appendix VIII — Documents Delivered to the Registrar of Companies and Available for Inspection.” Any person wishing to have detailed advice on PRC law and the laws of any jurisdictions is recommended to seek independent legal advice.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Appendix

The appendix contains the principal provisions of the Articles of Association.

Directors and Senior Officers

The Board is accountable to the shareholders’ general meeting. The Board shall carry out its duties in compliance with laws, regulations, other regulatory documents, the Articles of Association and resolutions passed by the shareholders’ general meeting.

Power to allot and issue shares

There is no provision in the Articles of Association empowering the Board to allot or issue shares. In order to allot or issue shares, the Board shall prepare a proposal for approval by shareholders in general meeting by way of special resolution. Any such allotment or issue must be conducted in accordance with the procedures stipulated by relevant laws and administrative regulations.

Power to dispose of our Company’s or its subsidiaries’ assets

The Board shall only dispose of our Company’s assets within the scope of the shareholders’ mandate.

Upon the Board disposes the fixed assets, such as the value of the consideration for the proposed disposition, and where any fixed assets have been disposed of in the period of four months immediately preceding the proposed disposition, the amount or value of the consideration for any such disposition, exceeds 33% of the value of the fixed assets as shown in the last audited balance sheet placed before the shareholders at the general meeting. However, the validity of a transaction for the disposition by our Company of fixed assets shall not be affected by the breach of the aforesaid requirements.

Compensation or payments for loss of office

In the contract for emoluments entered into by our Company with a Director or Supervisor, when our Company is acquired, provisions shall be made for the right of the Director or Supervisor to receive, after obtaining the prior consent of shareholders at the general meeting, compensation or other payments for loss of office or for his retirement from office. A takeover of our Company means:

(I) an offer made to all shareholders of our Company;
(II) an offer is made such that the offeror will become the Controlling Shareholder. The definition of the “Controlling Shareholder” is the same as Article 53 of the Articles of Association.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

If the relevant Director or Supervisor does not comply with this provisions, any sum received by the Director or Supervisor on account of the payment shall belong to those persons who have sold their shares as a result of the offer, and the expenses incurred by the Director or Supervisor in distributing that sum pro rata among those persons shall be borne by him and not deducted from the sum distributed.

Loans to Directors, Supervisors or other officers

Our Company is prohibited from directly or indirectly making any loan or guarantee in connection with a loan to the Directors, Supervisors, general manager and other senior officers of our Company or our parent company. Our Company is also prohibited from providing any loan or guarantee in connection with a loan made by any connected person to above mentioned parties.

The following transactions are not subject to the foregoing prohibition:

(I) the provision of a loan or a guarantee for a loan by our Company to a company which is a subsidiary of our Company;
(II) the provision of a loan or a guarantee for a loan or any other funds by our Company to any of its Directors, Supervisors, general manager and other senior officer to meet expenditure incurred by him for the purposes of our Company or for the purpose of enabling him to perform properly, in accordance with an employment contract approved by the shareholders’ general meeting his duties; and
(III) if the normal business scope of our Company includes providing loans or guarantee, our Company may make a loan to or provide a guarantee in connection with a loan by another person to any of its Directors, Supervisors, general manager and other senior officers and other connected persons on normal commercial terms.

A loan made by our Company in breach of the above provisions shall be forthwith repayable by the recipient of the loan regardless of the terms of the loan.

A guarantee provided by our Company in breach of the above prohibitions shall be unenforceable against our Company, unless:

(I) at the time when the loan was provided to an associate of any of the Directors, Supervisors, general manager, and other senior management officers of our Company or our parent company, the lender did not know the relevant circumstances;
(II) the collateral provided by our Company has been lawfully disposed of by the lender to a bona fide purchaser.

The aforesaid guarantee includes an undertaking or property provided to secure the performance of obligations by the obligor.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Giving of financial assistance to purchase the shares of our Company or any of its subsidiaries

Pursuant to the Articles of Association:

(I) Neither our Company nor any of its subsidiaries shall at any time or in any manner provide financial assistance to a person who acquires or is proposing to acquire shares in our Company. The said person includes any person who has directly or indirectly incurred a liability as a result of the acquisition of shares in our Company.
(II) Neither our Company nor any of its subsidiaries shall at any time or in any manner provide financial assistance to the person mentioned in the foregoing paragraph for the purposes of reducing or discharging his liabilities.

The following transactions are not prohibited in the foresaid provisions:

(I) the provision of financial assistance where our Company’s principal purpose for giving that assistance is genuinely for our Company’s interests and not for the purpose of acquiring our Company’s shares or the provision of such assistance is incidental to some broader objective of our Company;
(II) a distribution of our Company’s assets by way of dividend lawfully declared;
(III) a distribution of dividends by way of shares;
(IV) a reduction of registered capital, repurchase of shares of our Company or a reorganization of the share capital effected in compliance with the Articles of Association;
(V) the provision of loans by our Company in the ordinary course of our business within our business scope, provided that our Company’s net assets are not thereby reduced or, to the extent that those assets are reduced, the financial assistance is provided out of distributable profits;
(VI) our Company’s contribution to employees’ share schemes provided that our Company’s net assets are not thereby reduced or to the extent that those assets are thereby reduced, the assistance is provided out of distributable profits.

For the purpose of the foresaid provisions:

“Financial assistance” includes, without limitation to:

(I) assistance given by way of gift;
(II) assistance given by way of guarantee (including the provision of any undertaking or property to secure the performance of obligations by the obligor) or indemnity, (other than an indemnity in respect of our Company’s own default) or by way of release or waiver;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(III) assistance given by way of a loan; or entering into an agreement under which our Company needs to perform its obligations ahead of the other contracting parties; or entering into an agreement for the change of contracting parties or the assignment of rights arising under such loan or such agreement;
(IV) financial assistance given by our Company in any other manner when our Company is insolvent or has no net assets or where its net assets would thereby be reduced to a material extent.

“Incurring an obligation” includes incurring a liability by making an agreement or arrangement (whether enforceable or not, and whether made on its own account or with any other persons) or by changing one’s financial position by any other means.

Borrowing powers

Subject to compliance with the laws and administrative regulations of the State, our Company is entitled to raise capital and borrow money, including (without limitation) the issue of bonds, the mortgaging or pledging of part or whole of our Company’s properties and other rights permitted by the laws and administrative regulations of the State provided that such action does not damage or abrogate rights of any Shareholder. The Articles of Association do not contain any special provision in respect of the manner in which borrowing powers may be exercised by our Directors nor do they contain any special provision in respect of the manner in which such power may be raised, other than; (a) provisions which give our Directors the power to formulate proposals for the issuance of debentures by our Company; and (b) provisions which provide that the issuance of debentures must be approved by the Shareholders of our Company in a general meeting by way of a special resolution.

Disclosure of interests in and voting on contracts with our Company

Where a Director, Supervisor, general manager and other senior officer of our Company is, directly or indirectly, materially interested in a contract, transaction or arrangement or proposed contract, transaction or arrangement with our Company other than his contract of service, he shall disclose the nature and extent of his interest to the Board at the earliest opportunity, whether or not the contract, transaction or arrangement or proposal is otherwise subject to the approval of the Board under normal circumstances.

A Director shall not vote on any board resolution approving the contract, transaction or arrangement or any other related proposal in which he/she or any of his/her associate (as defined in the Listing Rules) is materially interested. The relevant Director shall not be counted for the purpose of determining whether a quorum is reached for the meeting.

Unless the interested Director, Supervisor, general manager and other senior management of our Company discloses his/her interests to the Board in accordance with the Articles of Association and the contract, transaction or arrangement is approved by our Board at a meeting in which the interested Director, Supervisor, general manager and other senior management is not counted in the quorum and refrains from voting, our Company shall have the right to cancel the contracts, transactions or arrangements, except where the opposite party is a party in good faith without knowledge of the acts or related Directors, Supervisors, general manager and senior management violating their obligations.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

A Director, Supervisor, general manager or other senior management of our Company is deemed to be interested in such contract, transaction or arrangement in which his/her related person is interested.

If a Director, Supervisor, general manager or other senior management of our Company gives the Board a written notice stating that, by reason of the facts stated in the notice, he is interested in contracts, transactions or arrangements which may subsequently be entered into by our Company, then within the content stated in the notice he shall be deemed to have made a disclosure in accordance with the relevant provisions in the Articles of Association, if such notice shall have been given before our Company considered to enter into such contract, transaction or arrangement for the first time.

Such resolutions shall be passed by more than one-half of the votes of the Directors who have no affiliated relationship in the resolutions.

Where the number of Directors who have no affiliated relationship attending the board meeting is less than three, the Board shall promptly refer such resolution(s) to shareholders’ general meeting. Upon such referral, the Board should explain the circumstances of review of the Board on such resolution(s) and record the views expressed by the Directors who have no affiliated relationship on such resolution(s).

Remuneration

Our Company shall, with the prior approval of shareholders in general meeting, enter into a contract in writing with each Director or Supervisor for emoluments in respect of their services. The said matters include:

(I) emoluments in respect of their services as Director, Supervisor or senior management of our Company;
(II) emoluments in respect of their services as Director, Supervisor or senior management of subsidiary of our Company;
(III) emoluments otherwise in connection with services for the management of our Company or any subsidiary thereof;
(IV) payments by way of compensation for loss of office, or in connection with their retirement from office.

Except under a contract entered into in relation to the above, no proceedings shall be brought by a Director or Supervisor against our Company for anything due to him in respect of the matters specified above.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Appointment，Dismissal and Resignation

None of the following persons shall serve as a Director, Supervisor, general manager or other senior management of our Company:

(I) Anyone who has no civil capacity or has limited civil capacity;
(II) Anyone who has been convicted of the offense of corruption, bribery, embezzlement, larceny, or disrupting the social economic order and is within five years of the expiry date of punishment or has been deprived of political rights because of this conviction and is within five years of the expiry date of the sentence;
(III) Anyone who has served as director, factory manager or manager of a company or enterprise that is bankrupt and liquidated as a result of improper management, was personally liable for the bankruptcy of our Company or enterprise, and is within three years of the date of completion of bankruptcy and liquidation of our Company or enterprise;
(IV) Anyone who has served as the legal representative of a company or enterprise whose business license was revoked due to violation of the law, was personally liable, and is within three years of the date on which the business license of our Company or enterprise was revoked;
(V) Anyone who has a large amount of debt, which was not paid at maturity;
(VI) Anyone who is under criminal investigation by a judicial organization for violating the criminal law, and whose case is pending;
(VII)Anyone who is not a natural person;
(VIII) Anyone judged by the competent agencies to have violated the provisions of relevant securities laws, has been involved in deceptive or dishonest acts and is within five years of the date on which the judgment was made;
(IX) Other circumstances as provided by laws and administrative regulations, or regulations of the competent authorities.

The validity of an act of the Directors, Supervisors, general manager and other senior management on behalf of our Company to bona fide third parties shall not be affected by any irregularities in their office, election or qualifications.

Our Company establishes the Board of Directors which consists of seven directors, among which, three are independent directors and one is the chairman of the Board. A Director is not required to hold shares of the Company.

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APPENDIX VI

SUMMARY OF ARTICLES OF ASSOCIATION

Directors shall be elected by Shareholders at the general Shareholders’ meeting and their terms of office shall be three years. Directors are eligible for re-election upon expiry of their terms of office, while the successive terms of office of independent non-executive directors shall not exceed nine years. Independent non-executive directors shall be elected, by Shareholders at the general Shareholders’ meetings, from members of the Board of Directors and the Board of Supervisors or candidates nominated by the Shareholder(s) holding more than 1% (1% included) of the issued Shares of our Company; and other Directors shall be elected, by Shareholders at the general Shareholders’ meetings, from members of the Board of Directors or candidates nominated by the Shareholder(s) holding more than 5% (5% included) of the issued Shares of our Company.

Written notices concerning proposed nomination of director candidate and indication of the candidate’s intention to accept the nomination shall be sent to our Company no later than seven days prior to the date of the general meeting. The seven-day notice period shall commence no earlier than the day immediately following the date of dispatch of the notice of general meeting concerning the election of Directors and shall end no later than the day falling seven days prior to the date of the general meeting.

There is no provision in the Articles of Association which imposes any age limit for Directors beyond which retirement as a Director is mandatory.

Duties

Each of our Directors, Supervisors, general manager and other senior management shall carry out his/her duties with the principle of good faith and shall not put himself/herself in a position where his/her own benefits may conflict with his/her obligations to our Company. This principle includes (but is not limited to) performing the following obligations:

(I) To act honestly in the best interests of our Company;
(II) To exercise one’s rights within but not exceeding the scope of authority;
(III) To exercise the discretion vested in him personally without being manipulated by others and not transferring discretionary powers to other persons, unless and to the extent permitted by laws or administrative regulations or with the informed consent of Shareholders given in a general Shareholders’ meeting;
(IV) To treat Shareholders of the same class equally and to treat Shareholders of different classes fairly;
(V) Not to enter into any contract, transaction or arrangement with our Company unless in line with the Articles of Association or otherwise approved by Shareholders at the general Shareholders’ meeting on an informed basis;
(VI) Not to use properties of our Company in any manner for his/her own benefit without consent of general meeting on an informed basis;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(VII)Not to exploit his/her position to accept bribes or other illegal income or expropriate properties of our Company by any means, including (but not limited to) opportunities beneficial to our Company;
(VIII) Not to accept commissions in connection with transactions of our Company unless agreed by the general Shareholders’ meeting on an informed basis;
(IX) To abide by the Articles of Association, faithfully execute official duties and protect interests of our Company, and not to exploit his/her position and authority in our Company for his/her own benefits;
(X) Not to compete with our Company in any manner unless agreed by the general Shareholders’ meeting on an informed basis;
(XI) Not to misappropriate funds of our Company or lend such funds to others, not to open accounts in his/her own name or other names for deposit of the assets of our Company, and not to provide guarantee for debts of the Shareholders of our Company or other individual(s) with the assets of our Company;
(XII)To keep such confidential information acquired by him/her during his/her tenure in respect of our Company, unless otherwise permitted by the Shareholders at the general Shareholders’ meeting on an informed basis; not to use such information unless in the interests of our Company; however, disclosure of such information to courts or other governmental authorities is permitted:
Disclosure is required by laws;
Disclosure is required by public interests;
Disclosure is required by the interests of the relevant Director, Supervisor, general manager or other senior management.

Each of the Directors, Supervisors, general manager and other senior management of our Company may not direct the following personnel or institutions (“related person”) to do acts that the Directors, Supervisors and senior management are prohibited from doing:

(I) Spouses or minor children of the Directors, Supervisors, general manager and other senior management of our Company;
(II) Trustees of the Directors, Supervisors, general manager and other senior management of our Company or the persons referred to in item (I) above;
(III) Partners of the Directors, Supervisors, general manager and other senior management of our Company or persons referred to in items (I) and (II) above;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(IV) Our Company under de facto control by the Directors, Supervisors, general manager and other senior management individually or jointly with the persons or other Directors, Supervisors and senior management referred to in items (I), (II) or (III) above;
(V) The directors, supervisors, general manager and other senior management of the controlled company referred to in item (IV) above.

The good faith obligation owed by the Directors, Supervisors, general manager and other senior management of our Company may not necessarily terminate upon the expiration of their terms of office; their obligations to keep the trade secrets of our Company in confidence shall survive upon the expiration of their terms of office. The duration of other obligations shall be determined in accordance with the principle of fairness, depending on the length of time from the occurrence of the events to the time of resignation, as well as the circumstances and conditions under which the relationship with our Company is terminated.

Liabilities of Directors, Supervisors, general manager and other senior management of our Company arising from violation of specific duties may be released by the Shareholders at the general Shareholders’ meeting on an informed basis, provided that the circumstances required by Article 52 of the Articles of Association.

Apart from the obligations as required by the related laws, administrative regulations or the listing rules of the stock exchange where the Shares of our Company are listed, the Directors, Supervisors, general manager and other senior management of our Company shall assume the following obligations to each of the Shareholders when exercising their authorities endowed by our Company:

(I) They may not cause our Company to operate beyond the scope of business indicated on our business license;
(II) They shall act honestly in the best interests of our Company;
(III) They may not deprive our Company of our properties in any manner, including, but not limited to, opportunities beneficial to our Company;
(IV) They may not deprive the Shareholders of personal rights and interests, including, but not limited to, the distribution right and voting right, except for restructuring of our Company submitted to the general Shareholders’ meeting for approval pursuant to the provisions of the Articles of Association.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

MODIFICATION OF THE ARTICLES OF ASSOCIATION

We may amend the Articles of Association based on the provisions of the relevant laws, administrative regulations and the Articles of Association.

Any amendment to the Articles of Association that involves Mandatory Provisions shall be approved by company approval authorities authorized by the State Council before taking into effect. Where the amendment involves our registration, the lawfully prescribed procedures for registration change shall be carried out.

SPECIAL VOTING PROCEDURES OF CLASSIFIED SHAREHOLDERS

Any Shareholder who holds different classes of Shares is a classified Shareholder. Any plan of our Company to change or abolish the rights of a classified Shareholder is subject to the approval of the general Shareholders’ meeting by a special resolution and the approval of a separate general meeting as convened by the affected classified Shareholder in accordance with the Articles of Association.

The rights of a classified Shareholder shall be viewed as changed or abolished under any of the following circumstances:

(I) Increase or decrease the classified Shares, or increase or decrease the number of classified Shares with equal or more voting or distribution rights and other privileges than this type of classified Shares;
(II) Convert all or part of the classified Shares into other types or convert all or part of another type of Shares into this type of classified Shares or grant such conversion right;
(III) Remove or reduce rights to dividends generated or rights to cumulative dividends attached to classified Shares;
(IV) Reduce or remove the right attached to classified Shares to receive dividends on a priority basis or the priority right to receive property distribution in the liquidation of our Company;
(V) Increase, cancel or reduce share conversion rights, options, voting rights, transfer or pre-emptive rights, or rights to acquire securities of our Company attached to classified Shares;
(VI) Remove or reduce rights to receive payment by our Company in specified currencies attached to classified Shares;
(VII)Create new class of Shares having voting or distribution rights, or other privileges equal or superior to those of the classified Shares;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(VIII) Impose restrictions on the transfer or ownership of the classified Shares or increase such restrictions;
(IX) Issue subscription or conversion rights for this or other classified Shares;
(X) Increase the rights and privileges of other types of Shares;
(XI) The reorganization plan of our Company may constitute assumption of responsibilities by different classes of Shareholders disproportionately during the reorganization;
(XII)Amend or abolish clauses stipulated in this Articles of Association.

Shareholders of the affected class, whether or not otherwise having the right to vote at general meeting originally, shall nevertheless have the right to vote at class meetings in respect of matters concerning items (II) to (VIII), (XI) to (XII) above, but interested Shareholders shall not be entitled to vote at class meetings.

Resolution of a class meeting shall be passed by votes of more than two thirds of Shareholders attending the relevant meeting with voting rights at such meeting.

Written notice of a class meeting shall be given 45 days before the date of the class meeting to notify all of the classified Shareholders in the share register of the matters to be considered at the meeting and the date and place of the class meeting. A Shareholder who intends to attend the class meeting shall deliver his/her written reply concerning attendance at the class meeting to our Company 20 days before the date of the class meeting.

If the number of Shares carrying voting rights at the class meeting represented by the Shareholders who intend to attend the class meeting reaches more than half of the aggregate Shares of such class carrying voting rights at the meeting, our Company may hold the class meeting; if not, our Company shall within five days notify the Shareholders of such class again by public notice, of the matters to be considered at the meeting and the date and place for the class meeting. Our Company may then convene the class meeting after publication of such notice.

Notice of class meetings needs only to be served on Shareholders who are entitled to vote at the meetings.

Class meetings shall be conducted in procedures as similar as possible to those of general Shareholders’ meetings. The provisions of our Articles of Association relating to the procedure for conducting general Shareholders’ meeting shall apply to any class meeting.

Except for holders of other classes of Shares, holders of domestic Shares and overseas listed foreign Shares are deemed to be Shareholders of different classes.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

The special procedures for voting by classified Shareholders shall not apply under the following circumstances:

(I) Upon the approval by a special resolution at the general Shareholders’ meeting (subject to unconditional mandate or terms and conditions stipulated in the resolution), our Company either separately or concurrently recognizes, allocates or issues Domestic Shares and overseas-listed foreign Shares every 12 months, and the number of Shares of each class to be recognized, allocated or issued shall not account for more than 20% of the outstanding Shares of such class;
(II) These shares are part of the plan to issue Domestic Shares and overseas-listed foreign Shares upon the establishment of our Company and the relevant plan is completed within 15 months of the date of approval by the securities regulatory authorities of the State Council;
(III) Upon the approval by the securities regulatory authorities of the State Council, the unlisted Shares held by our Shareholders become listed for trading on an overseas stock exchange.

ADOPTION OF SPECIAL RESOLUTIONS REQUIRES MAJORITY VOTE

Resolutions of the general Shareholders’ meetings shall be divided into ordinary resolutions and special resolutions.

Adoption of an ordinary resolution at general meeting shall be subject to approval by a simple majority of votes represented by the Shareholders (including their proxies) attending the meeting.

Adoption of a special resolution at general meeting shall be subject to approval by more than two thirds of votes represented by the Shareholders (including their proxies) attending the meeting.

VOTING RIGHTS

A Shareholder (including a proxy) when voting at a general meeting may exercise voting rights in accordance with the number of Shares with voting power held with each share representing one vote.

On a poll taken at a meeting, a Shareholder (including a proxy) entitled to two or more votes needs not cast all his/her votes in the same way.

When shareholders’ general meeting elects Directors, if there are two or more candidates for the place(s), each share held by shareholders (including their proxies) shall have the same number of voting rights as the number of elected place(s) and all such votes may be for one person or be split between several candidates. The distribution of voting right shall be explained.

In the event when the number of dissenting votes equals the number of supporting votes, whether on a show of hands or on a poll, the chairman of the meeting shall have a casting vote.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

GENERAL MEETINGS

General meetings are divided into annual general Shareholders’ meetings and extraordinary general meetings. General meetings are called by the Board. The annual general meeting shall be convened once a year and be held within six months of the end of the previous fiscal year.

ACCOUNTING AND AUDITS

Financial and accounting policies

Our Company shall develop its financial accounting policies pursuant to PRC laws, administrative regulations, as well as the PRC accounting standards developed by the competent department in charge of finance under the State Council.

The Board of our Company shall submit the financial reports of our Company, as required by the applicable laws, administrative regulations or directives promulgated by local governments and competent authorities to be prepared by our Company, at every annual general Shareholders’ meeting.

Our Company shall make its financial reports available for inspection by the Shareholders 20 days before the annual general meeting is convened. Each Shareholder is entitled to obtain one copy of the financial report referred to in this chapter.

Our Company shall send the aforesaid reports to each of the holders of overseas listed foreign shares by postage-prepaid mail at least 21 days before the annual general meeting is convened and the recipient’s address shall be the address as shown in the share register.

The financial statements of our Company shall, in addition to complying with PRC accounting standards, rules and regulations, be prepared in accordance with either international accounting standards or that of the overseas area in which our Company’s Shares are listed. If there is any material difference between the financial statements prepared respectively in accordance with the two accounting standards, such difference shall be stated in the notes to the financial statements. When our Company is to distribute its after-tax profits of the relevant financial year, the lower of the after-tax profits as shown in the two financial statements shall be adopted.

Any interim results or financial information published or disclosed by our Company shall be prepared in accordance with PRC accounting standards and regulations, and also in accordance with either international accounting standards or that of the overseas area in which our Company’s Shares are listed.

Our Company shall publish its annual results announcement within 3 months of the end of each financial year and publish its interim results announcement within 2 months of the end of the first six month period of each financial year, and publish its annual report within 4 months of the end of each financial year and publish its interim report within 3 months of the end of the first six month period of each financial year in accordance with the Listing Rules

Our Company shall not keep any accounting books other than those specified by law.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Appointment and Dismissal of Accountants

Our Company shall appoint an accounting firm with independent qualifications that meets appropriate requirements of the state to be responsible for auditing its annual report and reviewing its other financial reports. For the purpose of this Articles of Association, the accounting firm appointed by our Company at any time will be the auditor of our Company.

The first accounting firm of our Company may be appointed by the inaugural meeting of our Company before the first annual general Shareholders’ meeting and the accounting firm so appointed shall hold office until the conclusion of the first annual general meeting.

The Shareholders in general meeting may, by ordinary resolution, remove an accounting firm before the expiration of its office, notwithstanding the stipulations in the contract between the firm and our Company, but without prejudice to the firm’s right to claim, if any, for damages in respect of such removal.

The remuneration of an accounting firm or the manner in which such firm is to be remunerated shall be determined by general meeting. The remuneration of an accounting firm appointed by the Board shall be determined by the Board.

Our Company’s appointment of, removal of and non-reappointment of an accounting firm shall be resolved by the general Shareholders’ meeting, the resolution of which shall be filed with the securities regulatory agency of the State Council.

If our Company intends to remove or not to re-appoint an accounting firm, it shall notify the accounting firm in advance of 15 days and the accounting firm shall have the right to make a statement at the general Shareholders’ meeting. An accounting firm resigning on its own initiative shall make a declaration at the general meeting as to whether our Company is affected by any improprieties.

The accounting firm shall resign by sending a written resignation notice to our Company’s legal address. The notice shall take effect on the date of delivery to that address or any such later date as may be specified in the notice. Such notice shall contain the following statements:

A statement to the effect that there are no circumstances connected with its resignation which it considers should be brought to the notice of Shareholders or creditors of our Company; or
A statement of any circumstances that should be disclosed.

Our Company shall, within 14 days after its receipt of the written notice referred to in the preceding paragraph, send a copy of the notice to the relevant competent authorities. If the notice contains a statement referred to in the two items of the preceding paragraph, a copy thereof shall be deposited at our Company for inspection by Shareholders, and such copy shall also be delivered to holders of overseas listed foreign shares by the manner as stipulated in the Articles of Association or by postage-prepaid mail with recipients’ addresses as shown in the share register.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Where the notice of resignation of the accounting firm contains a statement referring to or stating any circumstances which it should account for, it may request the Board to convene an extraordinary general meeting for the purpose of giving an explanation of the circumstances referred to in the said notice.

NOTIFICATION AND AGENDA OF GENERAL MEETINGS

The general meeting is the organ of power in our Company and its functions and powers shall be exercised in accordance with the law.

Our Company shall not, without the prior approval of the general meeting, enter into any contract with any person, who is not a Director, Supervisor, manager or other senior management officer of our Company, to give to such a person the responsibility for the management of the whole or a substantial part of the business of our Company.

The Board shall convene an extraordinary general meeting within two months of the occurrence of any one of the following events:

(I) when the number of directors is less than that prescribed by our PRC Company Law or less than two-thirds of the number prescribed in the Articles of Association;
(II) when the unrecovered losses of our Company amount to one-third of its aggregate share capital;
(III) when Shareholder(s) individually or collectively holding 10% or more of the outstanding Shares of our Company carrying voting rights request so in writing;
(IV) when deemed necessary by the Board or when requested by the Supervisory Board;
(V) when proposed by more than two independent non-executive Directors;
(VI) any other circumstances stipulated in the laws, administrative regulations, regulations of the competent authorities, the Listing Rules or the Articles of Association.

When our Company convenes a general Shareholders’ meeting, it shall give written notice, at least 45 days prior to the date of the meeting, to all Shareholders registered in its share register. Such notice shall contain details of the matters proposed to be considered at the meeting and the date and venue of the meeting. Shareholders who intend to attend the meeting shall deposit at our Company written replies confirming their intention to attend at least 20 days prior to the date of the said meeting.

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APPENDIX VI

SUMMARY OF ARTICLES OF ASSOCIATION

When our Company convenes an annual general Shareholders’ meeting, Shareholder(s) holding 3% or more of the total number of the Shares of our Company carrying voting rights shall have the right to propose a new motion to our Company and propose the same to the convener in writing. The convener shall, within two days after receiving the proposed motion, issue a supplemental notice of general meeting to notify other Shareholders and include those matters which are within the scope of duties of the general Shareholders’ meeting into the agenda to be considered thereat.

Our Company shall, based on the written replies received 20 days before the date of the general meeting, calculate the number of Shares carrying rights to vote represented by Shareholders who intend to attend the meeting. If the number of Shares carrying rights to vote represented by Shareholders who intend to attend the meeting reaches more than one half of the total number of Shares in our Company which carry rights to vote, our Company may proceed to convene the general meeting; otherwise, our Company shall within five days notify the Shareholders again of the matters to be considered at, and the date and venue of the meeting by way of an announcement. Our Company may then proceed to convene the general meeting.

Notice of a general meeting shall:

(I) be given in writing;
(II) specify the venue, date and time of the meeting;
(III) state the matters to be considered at the meeting;
(IV) provide such information and explanation as necessary for the Shareholders to make an informed decision on the matters to be considered. This principle includes but not limited to that, in case of proposals made to amalgamate our Company with another, to repurchase Shares of our Company, to restructure its share capital, or otherwise, the details of the agreed terms of, and the contract (if any) for the proposed transaction must be provided, and the reason for and the consequences thereof must be properly explained;
(V) contain a disclosure of the nature and extent, if any, of material interests of any Director, Supervisor, manager or other senior management officer in the proposed transaction and the effect of the proposed transaction on them in their capacity as Shareholders in so far as it is different from the effect on the interests of other Shareholders of the same class;
(VI) contain the full text of any special resolution proposed to be proposed for adoption at the meeting;
(VII)contain a clear statement that a Shareholder entitled to attend and vote at the meeting shall be entitled to appoint one or more proxies to attend such meeting and to vote on his or her behalf and that such proxy may not necessarily be a Shareholder;
(VIII) specify the time and place for lodging proxy form(s) for the relevant meeting.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Notices of general meetings shall be delivered by any methods as permitted by the stock exchange of the place where our Company’s shares are listed (including but not limited to post, email, fax, announcement, release on the websites of our Company or the stock exchange of the locality where our Company’s shares are listed) to Shareholders (whether or not such Shareholders have a voting right at the general Shareholders’ meeting). In case of delivery by post, the addresses of the recipients shall be those registered in the share register. In respect of holders of Domestic Shares, notices of the general Shareholders’ meetings may also be given by way of an announcement.

The announcement referred to in the preceding paragraph shall be published in one or more newspapers designated by the securities regulatory agency of the State Council 45 to 50 days prior to the meeting. All holders of domestic shares shall be deemed to have received the notice of general meeting upon the publication of the announcement.

An accidental omission to give notice of a general meeting to any person entitled to receive notice or a failure by such person(s) to receive such notice shall not invalidate that general meeting and any resolution passed at that meeting.

Shareholders who request an extraordinary general meeting or a general meeting of a class of Shareholders shall comply with the following procedures:

(I) Shareholders who individually or collectively hold 10% or more of the Shares of our Company carrying voting rights can request the Board to convene an extraordinary general meeting or a class meeting by signing one or several copies of written request(s) in the same form and content, and stating resolutions proposed. The Board shall convene the extraordinary general meeting or the class meeting as soon as practicably upon receipt of the foresaid written requirement. The number of shareholdings referred to above shall be calculated as at the date of request made.
(II) In the event that the Board cannot or fails to perform its duty to convene a meeting, the Supervisory Board shall convene and chair the meeting in time. If the Supervisory Board fails to do so, the Shareholders who individually or collectively hold more than 10% of the Shares of our Company within more than 90 consecutive days may convene and chair the meeting by themselves.

If the Shareholders call and convene a meeting by themselves since the Board cannot convene a meeting in accordance with the foresaid requirement, the expenses reasonably resulted therefrom shall be borne by our Company and be deducted from the amounts due to the Directors as a result of loss of office.

Shareholders who individually or collectively hold more than 3% of the Shares of our Company may submit a temporary proposal to the Board in writing prior to ten days since the convening of the general Shareholders’ meeting; the Board shall notify other Shareholders within two days upon receiving the proposal and submit this temporary proposal to the general Shareholders’ meeting for consideration. The contents of the temporary proposal shall fall into the category of the terms of reference of the general Shareholders’ meeting and it shall have the explicit subject and specific resolutions.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Apart from aforesaid matters, the convener shall not amend the proposals stated in the notice of the general Shareholders’ meeting or add new proposals upon issuance of the announcement on the notice of the general Shareholders’ meeting.

The general Shareholders’ meeting shall be convened by the Board and chaired by the chairman; if the chairman cannot or fails to perform his/her duties, the general Shareholders’ meeting shall be chaired by a Director co-elected by more than half of the Directors. If the Board cannot or fails to perform its duty to convene the general Shareholders’ meeting, the Supervisory Board shall convene and chair the meeting in time; if the Supervisory Board cannot or fails to perform its duty to convene the general Shareholders’ meeting, the Shareholders who individually or collectively hold more than 10% of our Company’s Shares within more than 90 consecutive days may convene and chair the meeting by themselves. If the Shareholders cannot elect the chairman due to any reason, the Shareholder (including his/her proxy) presented at the meeting who holds the Shares carrying the maximum voting rights shall act as the chairman of the meeting.

The following matters shall be adopted by the general Shareholders’ meeting through ordinary resolutions:

(I) Work reports of the Board and the Supervisory Board;
(II) Plans formulated by the Board for the distribution of profits and for making up losses;
(III) Appointment or removal of members of the Board and members of Supervisory Board (except for the employee representative Supervisor), and their remuneration and manner of payment thereof;
(IV) Annual preliminary and final budgets, balance sheets, income and other financial statements of our Company;
(V) Matters other than those required by the laws, administrative regulations, provisions of the stock exchange where the Shares of our Company are listed or the Articles of Association to be approved by special resolutions.

The following matters shall be resolved by a special resolution at the general Shareholders’ meeting:

(I) The increase or decrease in our Company’s share capital, and issue of shares of any class, warrants and other similar securities;
(II) The issue of debentures of our Company;
(III) Division, merger, dissolution and liquidation of our Company and any change in the form of our Company;
(IV) Amendments to the Articles of Association;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(V) Share incentive plans to be considered and implemented;
(VI) any other matters required by laws, administrative regulations, department regulations, the rules of the securities regulatory body or the stock exchange where the shares of our Company are listed , and decided by the general Shareholders’ meeting, by way of an ordinary resolution, to be of a nature which may have a material impact on our Company.

TRANSFER OF SHARES

Unless otherwise provided by laws and administrative regulations, the Shares of our Company shall be freely transferable and free from any lien.

The alteration to, or rectification of, any part of the share register shall be carried out in accordance with the laws of the place where the share register is maintained.

Upon obtaining the approval from the State Council’s securities regulatory authority, holders of our Domestic Shares may list and trade their Domestic Shares in an overseas stock exchange. No class Shareholder voting is required for the listing and trading of such Shares on an overseas stock exchange, but such listing and trading of Shares shall comply with the procedures, regulations and requirements prescribed by the relevant overseas stock market.

RIGHTS OF OUR COMPANY TO BUY BACK ITS OUTSTANDING SHARES

Under any of the following circumstances, our Company may buy back our outstanding Shares pursuant to the requirements of the laws, administrative rules, the Listing Rules, regulations and the Articles of Association and subject to approvals of the relevant government authority:

(I) Cancellation of Shares to reduce our Company’s share capital;
(II) Merger with other companies which hold the Shares;
(III) Paying Shares to the employees of our Company as bonus;
(IV) Buying back the Shares from Shareholders who vote against any resolutions adopted at the general meeting concerning the merger and division of our Company;
(V) Other circumstances as permitted by the laws and administrative regulations.

In the event our Company buys back its Shares for reasons stated in (I) through (III) of the preceding paragraph, related resolutions must be adopted at the general Shareholders’ meeting. If our Company buys back the Shares according to the provisions of the preceding paragraph under the circumstances set forth in (I), the Shares bought back must be cancelled within ten days of the date on which they are bought back. In the event of the circumstances set forth in (II) and (IV), the Shares bought back must be transferred or cancelled within six months.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

In the event that our Company buys back the Shares pursuant to the provisions of (III) in the preceding paragraph, the Shares bought back may not exceed 5% of the total issued Shares of our Company. The fund used for such buyback must be allocated from the after-tax profit of our Company and the Shares bought back must be transferred to the employees within one year.

Our Company may, subject to the approval of the competent authorities of the PRC buy back Shares in any of the following ways:

(I) Making a pro-rata offer of repurchase to all its shareholders;
(II) Repurchasing Shares through public trading on a stock exchange;
(III) Repurchasing Shares by an agreement outside a stock exchange;
(IV) Other ways approved by the relevant competent authorities of the PRC.

Where our Company repurchases its Shares by an agreement outside a stock exchange the prior approval of the general meeting shall be obtained in accordance with the Articles of Association. Our Company may rescind, vary the contract or waive its rights under a contract so entered into by our Company with the prior approval at the general meeting in the same manner.

The aforementioned contract to repurchase Shares includes, but is not limited to, an agreement that consents to undertake the obligation to buy back the Shares and obtain rights to buy them back.

Our Company may not assign any contract for the repurchase of its Shares or any rights conferred under such contract.

Unless our Company is in the course of liquidation, it must comply with the following provisions in relation to repurchase of its issued Shares:

(1) Where our Company repurchases its Shares at par value, payment shall be made out of book surplus distributable profits of our Company, or out of proceeds of a new issue of Shares made for that purpose;
(2) Where our Company repurchases its Shares at a premium to its par value, payment up to the par value shall be made out of the book surplus distributable profits of our Company, or out of the proceeds of a new issue of Shares made for that purpose. Payment of the portion in excess of the par value shall be effected as follows:
Where the Shares being repurchased were issued at par value, payment shall be made out of the book surplus distributable profits of our Company;
Where the Shares being repurchased were issued at a premium to its par value, payment shall be made out of the book surplus distributable profits of our Company, and out of the proceeds of a new issue of Shares made for that purpose, provided that

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

the amount paid out of proceeds of the new issue shall neither exceed the aggregate premiums received by our Company on the issue of the Shares being repurchased nor the amount in the premium account (or capital reserve account) when the repurchase take place (including the premiums on the new issue);

(3) Payment by our Company for the following purposes shall be made out of our Company’s distributable profits:
Acquisition of rights to repurchase its Shares;
Variation of contract to repurchase its Shares;
Release of its obligation under any contract to repurchase Shares;
(4) After the total par value of the cancelled Shares is deduced from our registered capital pursuant to the relevant provisions, the amount deducted from the distributable profits for payment of the par value portion of the Shares repurchased shall be credited to our Company’s premium account (or capital reserve account).

DIVIDENDS AND DISTRIBUTION METHODS

Our Company may distribute dividends by the following ways:

(1) Cash;
(2) Shares;
(3) Other ways as permitted by laws, administrative regulations, departmental rules or the Listing Rules.

Cash dividends and other monies paid by our Company to holders of domestic Shares shall be paid in RMB. Cash dividends and other monies paid by our Company to holders of overseas-listed foreign Shares shall be calculated and announced in RMB and paid in a foreign currency. The foreign currency required by our Company to pay cash dividends and other monies to holders of overseas listed foreign Shares shall be obtained pursuant to state regulations on foreign exchange.

Our Company shall appoint receiving agents for holders of overseas-listed foreign Shares. The receiving agents appointed by our Company shall comply with the requirements of the laws in the jurisdiction where our Shares are listed or the requirements of the stock exchanges on which our Shares are listed. The receiving agents appointed on behalf of holders of overseas listed foreign Shares traded on the Hong Kong Stock Exchange shall be companies registered as a trust company under the Trustee Ordinance of Hong Kong.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

PROXIES

Any Shareholder entitled to attend and vote at a general meeting shall be entitled to appoint one or more persons (who may not necessarily be Shareholders) as his/her proxy to attend and vote on his/her behalf, and a proxy so appointed shall:

(1) Have the same right as the Shareholder to speak at the meeting;
(2) Have authority to demand or join in demanding a poll;
(3) Have the right to vote by hand or on a poll, but when there are more than one proxy, that proxy may only vote on a poll.

The instrument appointing a proxy shall be in writing and shall be signed by the appointer or a person duly authorized in writing. Where the appointor is a legal person, the stamp of the legal person shall be affixed, or signed by the director or a duly authorized agent.

The power of attorney must be kept at the residential address or other location designated in the notice convening the meeting no later than 24 hours before the meeting at which the power of attorney is put to vote is convened or 24 hours before the scheduled voting time. If the power of attorney is signed by another person authorized by the appointer by means of power of attorney or other instrument of authorization, the power of attorney or other instrument must be verified by a notary. The power of attorney or other instrument verified by the notary must be kept together with the power of attorney appointing the entrusted representative at our residential address or other location designated at the notice convening the meeting.

If the appointer is a legal person, its legal representative or such person as authorized by resolution of its Board of Directors or other governing bodies to act as its representative may attend at any general meetings of our Company.

Any form sent by the Directors to the Shareholder for appointing a shareholder proxy shall allow the Shareholder, according to his or her free will, to instruct the proxy to vote and provide instructions separately for matters to be put to vote on each item on the meeting agenda. The power of attorney shall specify that the shareholder proxy may vote at his or her own discretion if the Shareholder does not provide instructions.

A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or loss of capacity of the appointor or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Shares in respect of which the proxy is given, provided that no notice in writing of such matters as aforesaid shall have been received by our Company at its residence before the relevant meeting is convened.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

REGISTER OF MEMBERS AND OTHER RIGHTS OF SHAREHOLDERS

Pursuant to the understanding reached an agreement entered into between the securities regulator under the State Council and the overseas securities regulatory agency, our Company may keep overseas a register of members of the overseas-listed foreign Shares and entrust an overseas agency to manage it. The original register of members of the overseas listed foreign Shares listed in Hong Kong shall be kept in Hong Kong.

Our Company shall keep a copy of the register of members of the overseas-listed foreign Shares at our residential address. The overseas entrusted agency shall at all times guarantee consistency between the original and copy of the register of members of the overseas-listed foreign Shares.

In case of inconsistency between the original and copy of the register of members of the overseas-listed foreign Shares, the original shall prevail.

Our Company shall keep a complete register of members.

The register of members shall include the following:

(1) Register of members kept at our residential address other than those specified in (2) and (3);
(2) Register of members of our overseas-listed foreign Shares kept at the location of the overseas stock exchange where such Shares are listed;
(3) Register of members kept in other locations according to the decision of the Board of Directors as required for the listing of the Shares.

Different parts of the register of members shall not overlap. The transfer of Shares registered in a certain part of the register of members shall not be registered elsewhere in the register of members as long as the Shares remain registered. This provision does not apply to the registration of change of register of Shareholders during the issuance of new share capital in accordance with Article 20.

Any alteration or rectification to any part of the register of members shall be made in accordance with the laws in the place where such part of the register of members is maintained.

No change of the register of members as a result of the transfer of Shares shall be made within 30 days before the general Shareholders’ meeting is convened or within 5 days prior to the record date on which our Company decides to distribute dividends.

When our Company convenes the general meeting, distributes dividends, goes into liquidation or is involved in other actions that require the confirmation of equities, the Board of Directors shall fix a date as the equity registration date, upon expiration of which the Shareholders whose names appear on the register of members shall be the Shareholders.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Any person who objects to the register of members and requests to register his/her name (title) in the register of members or to remove his/her name (title) from the register of members may apply to the court with jurisdiction to amend the register of members.

Subject to production of the relevant written documents evidencing the class and quantity of Shares held and verification of their identities as Shareholders by our Company, Shareholders are entitled to obtain relevant information in accordance with laws, administrative regulations and the requirements of the Articles of Association, including:

A copy of the Articles of Association, subject to payment of costs;
The right to inspect and copy the following, subject to payment of a reasonable fee:
(1) All parts of the register of members;
(2) Personal particulars of each of our Company’s Directors, Supervisors, managers and other senior management, including:
- (a) Present and former names and aliases;
- (b) Principal address (place of residence);
- (c) Nationality;
- (d) Primary and all other part-time occupations and duties;
- (e) Identification documents and numbers;
(3) Status of our Company’s issued share capital;
(4) Reports showing the aggregate nominal value, quantity, highest and lowest prices paid in respect of each class of Shares repurchased by our Company since the previous accounting year and the aggregate amount paid by our Company for this purpose;
(5) Counterfoil of our Company’s debentures;
(6) The latest audited financial statements and the reports of the Board, auditors and the Supervisory Board;
(7) A copy of the latest annual review report, which shall be submitted to the State Administration for Industry and Commerce of the PRC or other authorities for inspection; and
(8) Minutes of general Shareholders’ meetings (for the inspection of Shareholders only).

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

QUORUM OF GENERAL MEETINGS

If the number of Shares carrying voting rights represented by the Shareholders intending to attend a meeting exceeds one half of the total number of Shares carrying voting rights, our Company may convene the general Shareholders’ meeting. If the number of a class of Shares carrying voting rights represented by the Shareholders intending to attend a meeting exceeds one half of the total number of such class of Shares, our Company may convene the classified meeting.

RESTRICTIONS ON RIGHTS OF CONTROLLING SHAREHOLDERS

In addition to the obligations imposed by laws, administrative regulations or the listing rules required by the stock exchange on which Shares of our Company are listed, Controlling Shareholders shall not exercise their voting rights in respect of the following matters in a manner prejudicial to the interests of all or part of the Shareholders of our Company:

(1) To release the responsibility of a Director or Supervisor to act honestly in the best interests of our Company;
(2) To approve the expropriation by a Director or Supervisor (for his/her own benefit or for the benefit of another person), in any way, of our Company’s assets, including (without limitation to) any opportunities beneficial to our Company;
(3) To approve the expropriation by a Director or Supervisor (for his/her own benefit or for the benefit of another person) of the personal rights of other Shareholders, including (without limitation to) rights to distributions and voting rights save pursuant to a restructuring proposal submitted to Shareholders for approval in accordance with the Articles of Association.

COMPANY LIQUIDATION

Our Company shall be dissolved and liquidated lawfully upon the occurrence of any of the following events:

(1) The operation period expires;
(2) A resolution for dissolution is passed by Shareholders at a general Shareholders’ meeting;
(3) Dissolution is necessary due to a merger or division of our Company;
(4) Our Company is legally declared insolvent due to its failure to repay debts as they become due;
(5) Our Company is ordered to close down because of its violation of laws and administrative regulations; or

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(6) Where our Company encounters significant difficulties in business and management, continuous survival will be significantly detrimental to the interests of Shareholders, and the difficulties may not be overcome through other means, Shareholders who hold more than 10% of the Shares carrying voting rights may request a People’s court to dissolve our Company.

Where our Company is dissolved due to the provisions set forth in (1) and (2) above, the liquidation team shall be established within 15 days and the personnel of the liquidation team shall be determined by a general Shareholders’ meeting with an ordinary resolution.

In the event that our Company is dissolved in accordance with the provisions set forth in (4) above, the People’s court shall organize Shareholders, related agencies and professionals to form the liquidation team to conduct the liquidation pursuant to relevant provisions of the law.

In the event that our Company is dissolved in accordance with the provisions set forth in (5) above, the relevant competent authority shall organize Shareholders, related agencies and professionals to form the liquidation team to conduct the liquidation.

If the Board decides to liquidate our Company (except where our Company is liquidated after declaring bankruptcy), the Board shall state in the notice of the general Shareholders’ meeting convened for this purpose that the Board has performed a comprehensive investigation of the status of our Company and believes that our Company is able to payoff all of our debts within 12 months of the start of liquidation.

Upon the passing of the resolution by Shareholders in the general Shareholders’ meeting for the liquidation of our Company, all duties and powers of the Board shall terminate immediately.

The liquidation committee shall act in accordance with the instructions of the general Shareholders’ meeting to make a report at least once every year to the general Shareholders’ meeting on the committee’s income and expenses, the businesses of our Company and the progress of the liquidation and to present a final report to the general Shareholders’ meeting on the completion of the liquidation.

During the liquidation period, the liquidation committee shall exercise the following functions and powers:

(1) Categorize our Company’s assets and prepare a balance sheet and an inventory of assets respectively;
(2) Notify the creditors or to publish public announcements;
(3) Dispose of and liquidate any pending businesses of our Company;
(4) Pay outstanding taxes;
(5) Settle claims and debts;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(6) Deal with the surplus assets remaining after repayment by our Company of debts;
(7) Represent our Company in any civil proceedings.

After it has categorized our Company’s assets and after it has prepared the balance sheet and an inventory of assets, the liquidation committee shall formulate a liquidation plan and present it to a general Shareholders’ meeting or to the relevant competent authority for confirmation.

Where our Company is liquidated by reason of dissolution, upon completion of the categorization of our Company’s assets and preparation of a balance sheet and an inventory of assets, if the liquidation committee discovers that our Company’s assets are insufficient to repay our Company’s debts in full, the liquidation committee shall immediately apply to the People’s court for a declaration of insolvency. After our Company is declared insolvent by a ruling of the People’s court, the liquidation committee shall transfer all matters arising from the liquidation to the People’s court.

Following the completion of the liquidation, the liquidation committee shall prepare a liquidation report, a statement of income and expenses received and made during the liquidation period and a financial report, which shall be verified by a Chinese certified public accountant and submitted to the general meeting or the relevant competent authority for confirmation.

The liquidation committee shall, within 30 days after the confirmation by the general Shareholders’ meeting or the relevant competent authority, submit the documents referred to in the preceding paragraph to the registration authority and apply for cancellation of registration of our Company, and publish a public announcement relating to the termination of our Company.

OTHER IMPORTANT PROVISIONS FOR OUR COMPANY OR THE SHAREHOLDERS

General Provisions

Our Company is a permanently existing joint stock limited company.

Our Company may invest in other companies, provided that, unless required by law, it may not become a jointly liable investor for the liability commitments of the invested company.

The Articles of Association is binding on our Company, the Shareholders, Directors, Supervisors, managers, and other senior management. The above personnel are entitled to make claims concerning the affairs of our Company in accordance with the Articles of Association.

Shareholders may sue our Company pursuant to the Articles of Association. Our Company may sue Shareholders pursuant to the Articles of Association. Shareholders may sue Shareholders pursuant to the Articles of Association. Shareholders may sue the Directors, Supervisors, managers and other senior management pursuant to the Articles of Association.

Our Company may increase stock capital by the following means:

(1) Offer new Shares to unspecified investors;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(2) Place new Shares with existing Shareholders;
(3) Give new Shares to existing Shareholders;
(4) Issue new Shares to particular investors;
(5) Convert the reserve funds into share capital;
(6) other means approved by the laws, administrative regulations and securities regulatory agency of the State Council.

Upon approval to issue our Company’s new Shares according to the provisions of the Articles of Association, the matter is to be dealt with in accordance with the procedures of related laws and administrative regulations of the State.

Our Company may reduce our registered capital according to the provisions of the Articles of Association. Reduction in registered capital of our Company is to be made in compliance with the procedures under the PRC Company Law, other relevant provisions and the Articles of Association.

Where our Company reduces our registered capital, it must prepare a balance sheet and a list of properties.

After our Company’s reduction in registered capital, our registered capital may not be less than the statutory minimum amount.

Shareholders

Domestic shares refer to the shares that are issued to and held by onshore investors and subscribed in RMB. Foreign shares refer to the shares that are issued to and held by offshore investors only and subscribed in foreign currencies, as well as the shares that are acquired from onshore investors by foreign investors.

The Shareholders of our Company are persons lawfully holding the Shares of our Company and whose names (titles) are listed in the register of Shareholders. Shareholders are entitled to rights and assume obligations according to types of their Shares and their shareholdings. Shareholders who hold the same type of Shares are entitled to the same rights and assume the same obligations.

The Shareholders of ordinary Shares of our Company enjoy the following rights:

(1) To receive dividends and other distributions in proportion to the number of Shares held;
(2) To participate in or appoint a proxy of Shareholder to participate in and exercise voting rights at the general Shareholders’ meeting;
(3) To supervise and manage our business and operational activities, provide suggestions or submit queries;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(4) To transfer the Shares held according to the provisions of the laws, administrative regulations and the Articles of Association;
(5) Subject to production of the relevant written documents evidencing the class and quantity of Shares held and verification of their identities as Shareholders by our Company, Shareholders are entitled to obtain relevant information in accordance with laws, administrative regulations and the requirements of the Articles of Association, including:
A copy of the Articles of Association, subject to payment of costs;
The right to inspect and copy the following, subject to payment of a reasonable fee:
- (1) All parts of the register of shareholders;
- (2) Personal particulars of each of the Company’s directors, supervisors, manager and other senior management personnel including:
  - (a) Present and former names and aliases;
  - (b) Principal address (place of residence);
  - (c) Nationality;
  - (d) Primary and all other part-time occupations and duties;
  - (e) Identification documents and numbers;
- (3) Status of our Company’s issued share capital;
- (4) Reports showing the aggregate nominal value, quantity, highest and lowest prices paid in respect of each class of Shares repurchased by our Company since the previous accounting year and the aggregate amount paid by our Company for this purpose;
- (5) Counterfoil of our Company’s debentures;
- (6) The latest audited financial statements and the reports of the Board, auditors and the Supervisory Board;
- (7) A copy of the latest annual review report, which shall be submitted to the State Administration for Industry and Commerce of the PRC or other authorities for inspection; and
- (8) Minutes of general Shareholders’ meetings (for the inspection of Shareholders only).

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

The Company shall make available the documents mentioned in sub-section (1) to (8) (except sub-section (2)) above and other applicable documents at its Hong Kong representative office for inspection, free of charge, by the public and the shareholders in accordance with requirements of the Listing Rules.

(6) To participate in the distribution of the remaining assets of our Company in proportion to the number of Shares held upon our termination or liquidation;
(7) To require our Company to acquire Shares of Shareholders who disagree with the resolutions on the merger or division of our Company which are passed by the general meeting;
(8) To entitle Shareholders holding, individually or in aggregate, more than 3% of Shares of our Company to propose additional resolution in writing to the Board 10 days before the general meeting;
(9) Other rights conferred by laws, administrative regulations and the Articles of Association.

Our Company may not exercise any power to freeze or otherwise impair any of the rights attaching to any Share by reason only that any person interested directly or indirectly in the Shares of our Company has failed to disclose his/her interests to our Company.

Our Company adopts the registered method for the Shares.

The Share certificates of our Company are signed by the chairman of the Board of Directors. Where the stock exchange on which the Shares are listed requires our other senior management of our Company to sign the Share certificates, they are also to be signed by other senior management. The Share certificates are to become effective after being affixed with the stamp of our Company or print-stamped. Affixing our Company stamp to the Share certificates is subject to the authorization of the Board of Directors. The signature of the chairman of the Board of Directors or other related senior management may also be printed on the Share certificates.

If any person whose name appears in the register of Shareholders or who requests to register his/her name (title) in the register of Shareholders loses his/her Share certificates (that is, “original Share certificates”), he/she may apply to our Company to re-issue new Share certificates for those Shares (the “Relevant Shares”). If our Company is granted a mandate to issue warrants to anonymous holders, it may not issue any new warrants to replace the original warrants lost unless it is convinced beyond reasonable doubt the original warrants have been destroyed.

In the event Shareholder of Domestic Shares applies to our Company for a re-issuance after losing the Share certificates, the matter is to be dealt with pursuant to related provisions of the PRC Company Law.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

In the event a Shareholder of overseas listed foreign Shares applies to our Company for re-issuance after losing the Share certificates, the matter is to be dealt with pursuant to the laws, rules of the stock exchange or other related provisions where the original register of Shareholders of the overseas listed foreign Shares is kept.

In the event a Shareholder of overseas listed foreign Shares listed in Hong Kong applies to our Company for re-issuance after losing the Share certificates, the Share certificates are to be issued in compliance with the following requirements:

(1) The applicant shall submit the application in the standard format designated by our Company and attach a notary certificate or legal declaration. The contents of the notary certificate or legal declaration shall include the reason for the applicant’s request, circumstances and evidence of loss of Share certificates, as well as a statement that nobody else may request to be registered as a Shareholder with respect to the pertinent Shares.
(2) Before deciding to issue new Share certificates, our Company does not receive any statement in which any person other than the applicant requests to be registered as the Shareholder with respect to the Shares.
(3) If our Company decides to issue new Share certificates to the applicant, we shall publish an announcement in a newspaper designated by the Board of Directors indicating that we plan to re-issue new Share certificates. The announcement period shall be 90 days and the announcement shall be published at least once every 30 days.
(4) Before publishing the announcement indicating that we plan to re-issue new Share certificates, our Company shall submit a copy of the announcement to be published to the securities exchange on which the Shares are listed and may publish the announcement after receiving a reply from the stock exchange confirming that the announcement has been displayed at the stock exchange. The period of displaying the announcement at the stock exchange is 90 days.

If the application for reissue of new Share certificates is not approved by the registered Shareholders of the related Shares, our Company shall mail the copy of the announcement to be published to the Shareholders.

(5) In the event that nobody raises any objection to the reissue of new Share certificates to our Company, upon expiration of the 90-day display period of the announcement specified in (3) and (4) above, the new share certificates may be reissued according to the application.
(6) When re-issuing new Share certificates according to the Articles of Association, our Company shall immediately cancel the original Share certificates and register the cancellation and reissue on the register of Shareholders.
(7) All expenses incurred by our Company from the cancellation of the original Share certificates and reissue of the new Share certificates are to be borne by the applicant. Before the applicant has provided reasonable security, our Company has the right to refuse to take any action.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

Shareholders Untraceable

When permitted by laws, our Company is entitled to sell the Shares of a Shareholder failing to be contacted under the following circumstances:

(1) Our Company has paid dividends at least three times on these Shares within 12 years, but no one has claimed the dividends during that period; and
(2) Upon expiration of the 12-year period, our Company publishes an announcement in a newspaper, indicating our intention to sell the Shares and notifies the stock exchange on which the Shares are listed of such intention.

Regulations on the Powers of the Board and Convening the Board Meetings

The Board of Directors is responsible to the general Shareholders’ meeting and exercises the following powers:

(1) Convene the general Shareholders’ meeting and report on work to the general Shareholders’ meeting;
(2) Implement the resolutions of the general Shareholders’ meeting;
(3) Determine our business and investment plans;
(4) Devise our annual financial budget and closing account plans;
(5) Devise our profit distribution and loss offset plans;
(6) Formulate the plans for increasing or decreasing our registered capital and the issue of corporate bonds;
(7) Formulate plans for corporate merger, separation, and dissolution of our Company;
(8) Decide on the setup of our Company’s internal management organization;
(9) Appoint or dismiss the general manager of our Company; based on the nomination of the general manager, to appoint or dismiss our deputy general manager and chief financial officer; to appoint or dismiss the secretary to the Board, and determine their remuneration;
(10) Determine the salaries, benefits, rewards and punishment for the staff of our Company;
(11) Approve our Company to appoint or change directors and shareholder representative supervisors of wholly-owned subsidiaries of our Company, appoint, change or recommend representatives of the shareholders, directors (candidate), and shareholder representative supervisors (candidate) of entities controlled or invested in by our Company;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(12) Set our basic management systems;
(13) Make the modification plan to this Articles of Association;
(14) Determine the establishment of our Company’s domestic or overseas sub-branches;
(15) Decide on the matters such as merger, division or reorganization of entities wholly-owned or controlled by our Company;
(16) Decide on the establishment of special committees under the Board and to appoint or remove its person-in-charge;
(17) Propose at general Shareholders’ meetings a resolution in respect of candidates for independent non-executive Directors and replacement of independent non-executive Directors;
(18) Propose at general Shareholders’ meetings for the appointment, renewal or remove of accountants’ firm conducting audit for our Company;
(19) Attend to the work report of our general manager and review the work of the general manager;
(20) Manage information disclosure of our Company;
(21) Formulate the equity incentives plan;
(22) Exercise decision-making power on issues in respect of external investment (including increase in investment and equity transfer), financing, venture investment, entrusted wealth management, provision of external guarantees, save and except for those decisions to be decided by the general Shareholders’ meeting pursuant to the law, regulations and the Articles of Association;
(23) Decide on other major affairs of our Company, save for matters to be resolved at general Shareholders’ meetings as required by the PRC Company Law and the Articles of Association;
(24) Decide on and to monitor the implementation of our Company’s risk management system, including risk assessments, financial control, internal audit and legal risk control;
(25) other powers conferred by the Articles of Association or the general Shareholders’ meetings;
(26) other matters authorized by the laws, administrative regulations, department rules and the Listing Rules.

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

All of the above resolutions adopted by the Board of Directors, except for those in (6), (7) and (13), which must be approved by more than a two-thirds vote of the Directors, are to be approved by a simple majority of votes by the Directors.

Board meetings are to be convened at least twice a year and called by the chairman of the Board of Directors, and a notice of at least 10 days is to be sent to all Directors before the meeting is convened.

The chairman of the Board of Directors shall convene a special Board meeting within 10 days upon receiving the proposal in case of occurrence of any of the following events:

(1) When the Shareholders representing over 10% of voting rights make a proposal;
(2) When over one third of Directors make a proposal;
(3) When the chairman of the Board of Directors deems necessary;
(4) When two independent non-executive Directors make a proposal;
(5) When the Supervisory Board makes a proposal;
(6) When the general manager makes a proposal.

The Directors shall attend the Board meeting in person. In the event that Directors are unable to attend the meeting for some reason, he/she may appoint in writing another Director to attend the Board meeting. The proxy letter is to specify authority domain.

The Director who attends the meeting on behalf of another Director is to exercise the right of the Director within the scope of authorization. If any Director fails to attend the Board meeting or entrust a proxy to be present on his/her behalf, such Director is deemed to have waived his/her voting rights at that meeting.

Board meetings are to be attended by more than half of the Directors (including their proxies) before the Board meeting can be convened.

Each Director has one vote. Save as otherwise specified in these Articles of Association, resolutions made by the Board of Directors must be approved by more than half of the Directors’ votes.

When the number of dissenting votes equals the number of affirmative votes, the chairman of the Board of Directors is entitled to one additional vote.

Apart from certain exceptions specified in laws, regulations and listing rules of the stock exchanges in the place where our Company’s Shares are listed or permitted by the Stock Exchange, a Director may not vote on passing of any resolution pertaining any contract, arrangement or any other

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

recommendation in which he/she himself/herself or any of his/her associates is materially interested proposed at a Board meeting. Such Director may not be counted in the quorum of the relevant meeting. Where the number of the Directors who can vote on this matter is less than three, such issue is to be submitted to the general Shareholders’ meeting for voting.

Independent Director

The Board of Directors includes three independent non-executive Directors. The independent non-executive Directors shall carry out responsibilities in an independent manner, without influence by our Company’s major Shareholders, de facto controller, or other units or individuals which have interests in our Company, or its major Shareholders, or de facto controller. The independent Directors are to perform their duties diligently, so as to protect our Company’s interests, in particular, to ensure that the legal rights of the public Shareholders are not infringed.

Secretary to the Board

The secretary to the Board must be a natural person with the requisite expertise and experience and be appointed by the Board of Directors.

Supervisory Board

Our Company shall set up a Supervisory Board. The Supervisory Board consists of five Supervisors, and one of them serves as the chairman of the Supervisory Board. The Supervisors serve three-year terms and may be re-elected. The chairman of the Supervisory Board shall be elected and dismissed by more than a two-thirds vote of the members of the Supervisory Board.

The Supervisory Board shall consist of three shareholder representative Supervisors and two employee representative Supervisors of our Company. The shareholder representative Supervisors shall be elected and dismissed by the general meeting. The employee representatives shall be elected and dismissed through democratic election.

The Directors, general manager, secretary to the Board, chief financial officer and other senior management may not also serve as Supervisors.

The Supervisory Board is to convene at least two regular meetings every year. The chairman is to convene extraordinary meetings of the Supervisory Board. The supervisors may propose to convene an extraordinary meeting of the Supervisory Board. If the chairman is unable or fails to perform his duties, a supervisor jointly selected by a majority of the supervisors shall convene and preside over the meetings.

The Supervisory Board is responsible to the general Shareholders’ meeting and lawfully exercises the following powers:

(1) Examine the financial standing of our Company;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(2) Supervise the Directors, general manager and other senior management in performing their duties to our Company, to determine whether there is any action in contravention of any laws, administrative regulations or the Articles of Association, and to put forward suggestions for dismissing any Directors or senior management who are in breach of the laws, administrative regulations, the Articles of Association or resolutions of the general Shareholders’ meetings;
(3) Require the Directors, general manager and other senior management to take corrective measures when their actions are detrimental to our Company’s interests;
(4) Verify the financial information such as the financial reports, business reports and profit distribution plans to be submitted by the Board to the general Shareholders’ meetings and, should any queries arise, to authorize, in the name of our Company, a re-examination by the certified public accountants and practicing auditors;
(5) Propose to convene an extraordinary general Shareholders’ meeting, where the Board of Directors fails to perform the duties in relation to convening or presiding over the general meeting as required by the PRC Company Law, to convene and preside over the general Shareholders’ meeting;
(6) Submit proposals at the general Shareholders’ meetings;
(7) Propose to convene extraordinary Board meetings;
(8) Represent our Company in negotiating with or in bringing actions against the Directors and senior management;
(9) Investigate into any abnormalities in operation of our Company; if necessary, to engage accounting firms, law firms and other professional institutions to assist its work, and the expenses are to be borne by our Company;
(10) Other powers and duties stipulated in the Articles of Association.

The Supervisors are to attend the Board meeting and may make queries or provide suggestions on the resolutions of the Board meeting.

General Manager

Our Company includes one general manager, nominated, appointed or dismissed by the Board of Directors.

The general manager of our Company is responsible to the Board of Directors and exercises the following powers:

(1) Be in charge of the producing and operational management of our Company, to organize the enforcement of resolutions of the Board of Directors;

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APPENDIX VI SUMMARY OF ARTICLES OF ASSOCIATION

(2) Organize the implementation of the annual operation plans and investment schemes of our Company;
(3) Formulate the structure scheme of the internal management agency of our Company;
(4) Formulate the structure scheme of the branch of our Company;
(5) Formulate the basic management system of our Company;
(6) Formulate the basic rules of our Company;
(7) Propose the appointment or dismissal of the deputy general manager, chief financial officer or other senior management of our Company;
(8) Appoint or dismiss management other than those to be appointed or dismissed by the Board of Directors;
(9) Determine the salaries, benefits, rewards and punishment for the staff of our Company, and to determine the appointment and dismissal of the staff of our Company;
(10) Propose to convene extraordinary Board meetings;
(11) Other powers and duties authorized by the Articles of Association and the Board of Directors.

Reserves

When the annual after-tax earnings of our Company are distributed, our Company must allocate 10% of the profits to our statutory reserve. When the aggregate amount of the statutory reserve reaches or exceeds 50% of our Company’s registered capital, no more allocations need to be provided.

If our statutory reserve is insufficient to offset our losses incurred during the previous year, the profits generated during the current year must be used to make up the losses before allocating the statutory reserve in accordance with the requirements set forth in the preceding paragraph.

After allocation to the statutory reserve from the profits after tax of our Company, we may also allocate to the reserves at will from after-tax earnings in line with the resolution(s) adopted at the general Shareholders’ meeting.

After offsetting the losses and allocating to the reserve, all remaining profits after tax may be distributed in proportion to Shares held by Shareholders.

If it is resolved at the general Shareholders’ meeting to distribute profit to Shareholders before offsetting the losses and making allocation to statutory revenue reserve in violation to the provisions of the previous paragraph, the Shareholders shall return such distributed profits to our Company.

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APPENDIX VI

SUMMARY OF ARTICLES OF ASSOCIATION

The Shares held by our Company may not participate in the profit distribution.

Settlement of Disputes

Our Company shall comply with the following rules governing the settlement of disputes:

(1) Whenever there occur any disputes or claims between Shareholders of the overseas-listed foreign Shares and our Company, Shareholders of the overseas-listed foreign Shares and our Company’s Directors, Supervisors, general manager or other senior management, or Shareholders of the overseas-listed foreign Shares and Shareholders of Domestic Shares regarding the rights or obligations relating to the affairs of our Company imposed by the Articles of Association, the PRC Company Law and other relevant laws and administrative regulations, such disputes or claims are to be referred by the relevant parties to arbitration.

Where the aforesaid dispute or claim of rights is referred to arbitration, the entire claim or dispute as a whole must be referred to arbitration, and any parties who have a cause of action based on the same facts or whose participation is necessary for the settlement of such dispute or claim, are bound by the award of the arbitration provided that such person is our Company or a Shareholder, a Director, a Supervisor, the general manager or other senior management of our Company.

Disputes in relation to the definition of Shareholders and the Shareholders’ register need not be resolved by arbitration.

(2) A claimant may elect for arbitration at either the China International Economic and Trade Arbitration Commission in accordance with its arbitration rules or the Hong Kong International Arbitration Centre in accordance with its Securities Arbitration Rules. Once a claimant refers a dispute or claim to arbitration, the other party must submit to the arbitral body so elected by the claimant.

If a claimant elects for arbitration at Hong Kong International Arbitration Centre, any party to the dispute may request the arbitration to be conducted in Shenzhen in accordance with the Securities Arbitration Rules of the Hong Kong International Arbitration Centre.

(3) The laws of the PRC are applicable to the arbitration for the disputes or claims of rights referred to in item (1), unless otherwise provided in the laws and administrative regulations.
(4) The award of an arbitration body shall be final and binding on all parties.

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

1. FURTHER INFORMATION ABOUT OUR COMPANY

A. Establishment

Our Company, previously known as Zhejiang Flat Glass & Mirror Co., Ltd. (浙江福萊特玻璃鏡業股份有限公司) and Flat Solar Glass Group Co., Ltd. (福萊特光伏玻璃集團股份有限公司), was converted from our predecessor Zhejiang Flat Glass & Mirror Ltd. (浙江福萊特玻璃鏡業有限公司, originally named as Naibang Trading), a limited liability company, into a joint stock limited liability company pursuant to the PRC Company Law on December 29, 2005.

Our Company has obtained a certificate of registration of non-Hong Kong Company under Part 16 of the Companies Ordinance issued on June 29, 2015, with a principal place of business at 18/F Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong. Ms. Leung Wing Han Sharon, whose correspondence address is the same address of our principal place of business in Hong Kong, has been appointed as our Company’s agent for the acceptance of service of process in Hong Kong. As our Company is established in the PRC, its corporate structure and the Articles of Association are subject to the relevant laws and regulations of the PRC. Summaries of the principal legal and regulatory provision of the PRC and the Articles of Association are set out in Appendices V and VI to this document.

B. Changes in share capital and transfer of shares

(a) Changes in share capital

Establishment in 1998

Our predecessor, Naibang Trading, a limited liability company, was established in the PRC on June 24, 1998 with a registered capital of RMB510,000, which has been fully paid up.

Conversion into a joint stock limited company in 2005

On December 29, 2005, Zhejiang Flat Glass & Mirror Ltd. (浙江福萊特玻璃鏡業有限公司, with previous name of Naibang Trading) was converted to a joint stock limited company under the name of Zhejiang Flat Glass & Mirror Co., Ltd. (浙江福萊特玻璃鏡業股份有限公司), with the registered capital of RMB70,000,000, divided into 70,000,000 Domestic Shares for a par value of RMB1.00 each, of which 68,400,000 Domestic Shares were subscribed for by our Promoters for an aggregate consideration of RMB68,400,000, at RMB1.00 per Share, which was contributed to our Company by the appraised net assets of our predecessor, and the remaining 1,600,000 Domestic Shares were subscribed by Ms. Ruan Zeyun, for a cash consideration of RMB1,600,000, at RMB1.00 per Share, which was paid by Ms. Ruan Zeyun, with her own capital, in full by cash as of November 10, 2005.

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

Changes in share capital within the two years preceding the date of this document

The following sets out the changes of share capital of our Company have taken place within the two years preceding the date of this document:

On May 30, 2014, the registered capital of our Company was reduced from RMB359,400,000 to RMB337,500,000, by reduction of RMB21,900,000, representing 21,900,000 Domestic Shares amounted for 6.09% of the then registered capital of our Company and all of the Shares owned by Primemont Capital, Boxin Preferred, Guoyuan Investment and Boxin Growth.

Pursuant to the resolutions of extraordinary Shareholders’ meeting held on May 18, 2015, our Company’s existing Shares with a nominal value of RMB1.00 each will split into four Shares with a nominal value of RMB0.25 each be carried out immediately upon Listing.

Upon completion of the [REDACTED], but without taking into account any H Shares which may be issued by our Company pursuant to the [REDACTED], our registered share capital will increase to RMB[REDACTED], made up of [REDACTED] Domestic Shares and [REDACTED] H Shares issued under the [REDACTED], representing approximately [REDACTED]% and [REDACTED]% of the registered share capital, respectively, with a nominal value of RMB0.25 each.

(b) Transfer of shares

The following sets forth the transfer of shares between Shareholders of our Company since the date of its conversion into a joint stock limited company:

Date August 1, 2010 . . November 1, 2010 . . . . . . . November 1, 2010 . . . . . . .	Transferor Mr. Jing Zongfa (景總法先生) Mr. Wei Shutao (魏述濤先生) Mr. Xiao Jingmin (肖敬民先生)	Transferee Mr. Ruan Hongliang (阮洪良先生) Mr. Ruan Hongliang (阮洪良先生) Mr. Ruan Hongliang (阮洪良先生)	Number of Domestic Shares (with a nominal value of RMB1.00 each) Transferred (%) 100,000 (0.09) 1,070,000 (0.95) 100,000 (0.09)	Consideration RMB350,000 RMB6,955,000 RMB650,000	Determination of Consideration The original subscription price of RMB2.50 per Domestic Share of our Company paid by Mr. Jing Zongfa in 2009 The net asset value per share of our Company as at June 30, 2010 The net asset value per share of our Company as at June 30, 2010	Completion Date
						December 22, 2010 December 22, 2010 December 22, 2010

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APPENDIX VII

STATUTORY AND GENERAL INFORMATION

Date April 12, 2014. . . April 10, 2015. . .	Transferor Mr. Wang Benyu (王本語先生) Mr. Wang Jiahua (王家華先生)	Transferee Mr. Ruan Hongliang (阮洪良先生) Mr. Zhao Xiaofei (趙曉非先生)	Number of Domestic Shares (with a nominal value of RMB1.00 each) Transferred (%) 900,000 (0.25) 1,200,000 (0.36)	Consideration RMB3,483,000 RMB5,400,000	Determination of Consideration The net asset value per share of our Company as at December 31, 2013 Arm’s length negotiation between Mr. Wang Jiahua and Mr. Zhao Xiaofei	Completion Date
						May 30, 2014 April 23, 2015

C. Restrictions on share repurchase

For details of the restrictions on share repurchase by our Company, please refer to the paragraph headed “Rights of our Company to Buy Back its Outstanding Shares” in “Appendix VI — Summary of Articles of Association” in this document.

D. Resolutions of the extraordinary Shareholders’ meeting in relation to the [REDACTED]

On May 18, 2015, the Shareholders approved, among other things, the following resolutions and matters:

(a) the issue by our Company of H Shares of nominal value of RMB0.25 each up to [REDACTED] H Shares in total (without taking into account the H Shares which may be issued upon the exercise of the [REDACTED]) and such H Shares be listed on the Stock Exchange, and the issue price of the H Shares will be decided upon completion of the book building process for the Listing;
(b) the stock split of the Domestic Shares with a nominal value of RMB1.00 each into four Shares with a nominal value of RMB0.25 each immediately upon Listing;
(c) subject to the completion of the [REDACTED], the Articles of Association be approved and adopted, which shall only become effective on the Listing Date, and authorizing the Board to amend the Articles of Association in accordance with the relevant laws and regulations and the requirements by the relevant government authorities; and
(d) authorizing the Board and its authorized representatives to handle all relevant matters relating to, among other things, the implementation of issue of H Shares and the Listing.

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

2. FURTHER INFORMATION ABOUT OUR SUBSIDIARIES

A. Further Information about Our PRC Subsidiaries

(a) Shanghai Flat

Nature of the company Domestic enterprise Term of business operation From June 6, 2006 to June 5, 2016 Registered capital RMB70,000,000 Attributable interest of our 100% Company Scope of business Manufacture, processing and sales of special, energy-saving, safe, coated and solar PV glass, import and export business of goods and technology (those requiring administrative examination and approval shall be examined and approved by the relevant administration) Legal representative Mr. Ruan Hongliang (阮洪良)

(b) Zhejiang Jiafu

Nature of the company Domestic enterprise Term of business operation From August 15, 2007 to August 14, 2027 Registered capital RMB150,000,000 Attributable interest of our 100% Company Scope of business Manufacture, processing and sales of special glass; sales of gold and silver products; wharf cargo handling service; import and export business (except business prohibited or restricted by the country, except dangerous goods) (those requiring administrative examination and approval shall be examined and approved by relevant administration) Legal representative Mr. Ruan Hongliang (阮洪良)

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APPENDIX VII STATUTORY AND GENERAL INFORMATION (c) Anhui Flat Glass Nature of the company Domestic enterprise Term of business operation From January 18, 2011 to January 17, 2061 Registered capital RMB30,000,000 Attributable interest of our 100% Company Scope of business Manufacture, processing and sales of special glass Legal representative Mr. Ruan Hongliang (阮洪良) (d) Anhui Flat Materials Nature of the company Domestic enterprise Term of business operation From January 19, 2011 to January 18, 2061 Registered capital RMB30,000,000 Attributable interest of our 100% Company Scope of business Open pit mining of glass-use quartzite; sales of quartzite ore, building materials and silicon products (those requiring administrative examination and approval shall be examined and approved by the relevant administration) Legal representative Mr. Ruan Hongliang (阮洪良) (e) Zhejiang Flat Nature of the company Domestic Enterprise Term of business operation From February 14, 2011 to February 13, 2031 Registered capital RMB10,000,000 Attributable interest of our 100% Company

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APPENDIX VII	STATUTORY AND GENERAL INFORMATION
Scope of business	Manufacture of special glass, mirrors, and glassworks; sale of
	building materials; import and export business (those
	requiring administrative examination and approval shall be
	examined and approved by the relevant administration)
Legal representative	Mr. Ruan Hongliang (阮洪良)
(f) *Flat New Energy*
Nature of the company	Domestic enterprise
Term of business operation	From March 11, 2014 to long term
Registered capital	RMB10,000,000
Attributable interest of our	100%
Company
Scope of business	Development of new energy power generation technology,
	transfer, advisory and service of technology; investment and
	development of new energy power generation projects;
	design, construction, operation and maintenance of
	distributed new energy power stations; research and
	development, manufacture and processing of PV materials
	(those requiring administrative examination and approval
	shall be examined and approved by the relevant
	administration)
Legal representative	Mr. Ruan Hongliang (阮洪良)

B. Changes in the share capital of our subsidiaries

The following alterations in the registered capital of our principal subsidiaries have taken place within the two years preceding the date of this document:

(a) Flat HK

On January 9, 2013, Flat HK was incorporated under the laws of HK as a limited company with an authorized share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. On the same day, the 10,000 shares of Flat HK were issued and allotted to our Company.

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

(b) Flat New Energy

On March 11, 2014, Flat New Energy was established under the PRC laws as a limited liability company with registered capital of RMB10,000,000 contributed solely by our Company.

3. FURTHER INFORMATION ABOUT THE BUSINESS

A. Summary of material contracts

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the members of our Group within the two years preceding the date of this document:

(a) a capital reduction agreement dated January 1, 2014 entered into among our Company, Boxin Growth and Boxin Preferred (the “Boxin Capital Reduction Agreement”), pursuant to which Boxin Growth and Boxin Preferred agreed to reduce their equity interests held in our Company by the reduction of an aggregate of 9,000,000 shares in the capital of our Company held by Boxin Growth and Boxin Preferred for a total consideration of RMB172,776,000;
(b) a supplemental agreement to the Boxin Capital Reduction Agreement dated January 1, 2014 entered into among our Company, Boxin Growth, Boxin Preferred and Mr. Ruan Hongliang as guarantor in relation to the amendments of the payment terms under the Boxin Capital Reduction Agreement;
(c) a capital reduction agreement dated January 1, 2014 entered into between our Company and Primemont Capital (the “Primemont Capital Reduction Agreement”), pursuant to which Primemont Capital agreed to reduce its equity interest held in our Company by the reduction of 8,400,000 shares in the capital of our Company held by Primemont Capital for a total consideration of RMB161,257,600;
(d) a supplemental agreement to the Primemont Capital Reduction Agreement dated January 2, 2014 entered into among our Company, Primemont Capital and Mr. Ruan Hongliang as guarantor in relation to the amendments of the payment terms and the representations and warranties under the Primemont Capital Reduction Agreement;
(e) a capital reduction agreement dated January 1, 2014 entered into between our Company and Guoyuan Investment (the “Guoyuan Capital Reduction Agreement”), pursuant to which Guoyuan Investment agreed to reduce its equity interest held in our Company by the reduction of 4,500,000 shares in the capital of our Company held by Guoyuan Investment for a total consideration of RMB86,388,000;
(f) a supplemental agreement to the Guoyuan Capital Reduction Agreement dated January 2, 2014 entered into among our Company, Guoyuan Investment and Mr. Ruan Hongliang, Ms. Jiang Jinhua and Ms. Ruan Zeyun as guarantors in relation to the amendments of the payment terms and the representations and warranties under the Guoyuan Capital Reduction Agreement;

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

(g) an equity transfer agreement dated March 10, 2014 entered into between Shanghai Flat and our Company, pursuant to which Shanghai Flat agreed to transfer and our Company agreed to acquire 45% equity interest held by Shanghai Flat in Zhejiang Jiafu at a consideration of RMB67,500,000;
(h) an equity transfer agreement dated March 10, 2014 entered into between Zhejiang Jiafu and our Company, pursuant to which Zhejiang Jiafu agreed to transfer and our Company agreed to acquire 40% equity interest held by Zhejiang Jiafu in Anhui Flat Glass at a consideration of RMB12,000,000;
(i) an equity transfer agreement dated March 10, 2014 entered into between Zhejiang Jiafu and our Company, pursuant to which Zhejiang Jiafu agreed to transfer and our Company agreed to acquire 40% equity interest held by Zhejiang Jiafu in Anhui Flat Materials at a consideration of RMB12,000,000;
(j) Deed of Indemnity;
(k) Deed of Non-competition;
(l) [REDACTED]; and
(m) [REDACTED] Agreement.

B. Our intellectual property rights

(a) Trademarks

As of the Latest Practicable Date, we have registered 32 trademarks in the PRC and four trademarks in Hong Kong, and the following trademarks which, in the opinion of our Directors, are material to our business:

No. 1.	Trademark	Place of Registration PRC	Class 19	Registration Number 4998050	Expiry Date
					September 20, 2019

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

No. 2. 3. 4. 5. 6. 7. 8. 9.	Trademark	Place of Registration PRC PRC PRC PRC PRC PRC PRC PRC	Class 20 21 20 20 1 1 2 11	Registration Number 4998051 4998052 4998053 6014581 7413745 7413869 7413885 7425626	Expiry Date
					April 13, 2019 February 13, 2019 January 20, 2020 December 20, 2019 November 20, 2020 October 13, 2020 January 20, 2021 January 27, 2021

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

No. 10. 11. 12. 13. 14. 15. 16. 17.	Trademark	Place of Registration PRC PRC PRC PRC PRC PRC PRC PRC	Class 17 19 20 21 21 12 2 9	Registration Number 7425639 7442338 7442451 7482842 7482843 7545400 7545429 7545464	Expiry Date
					August 20, 2020 September 20, 2020 October 6, 2020 January 6, 2021 October 20, 2020 February 13, 2021 January 20, 2021 February 27, 2021

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

No. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.	Trademark	Place of Registration PRC PRC PRC PRC PRC PRC PRC PRC PRC PRC PRC	Class 19 20 21 21 9 19 19 19 9 9 9	Registration Number 8466259 8466299 8469466 8469467 7413916 8466244 9500496 9500480 9500445 9500433 9500418	Expiry Date
					July 20, 2021 July 20, 2021 July 20, 2021 July 20, 2021 August 27, 2022 May 20, 2023 August 20, 2022 July 13, 2022 July 13, 2022 July 13, 2022 September 13, 2022

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

No. 29. 30. 31. 32. 33. 34. 35. 36.	Trademark	Place of Registration PRC PRC PRC PRC HK HK HK HK	Class 21 21 21 19 19, 20, 21 19, 20, 21 19, 20, 21 19, 20, 21	Registration Number 9495210 9495211 1786326 1770149 303262428 303262446 303262419 303262400	Expiry Date
					June 13, 2022 June 13, 2022 June 13, 2022 May 20, 2022 January 8, 2025 January 8, 2025 January 8, 2025 January 8, 2025

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

As of the Latest Practicable Date, we have registered one trademark in countries and regions outside the PRC and Hong Kong and the following trademark which, in the opinion of our Directors, is material to our business:

No. 1.	Trademark	Place of Registration Australia, U.S. and European Union	Class 19, 20, 21	Registration Number 1070642	Expiry Date
					November 9, 2020

As of the Latest Practicable Date, seven and six applications have been made for the registration of trademarks both in the PRC and in Hong Kong, respectively, and the following trademarks applications which, in the opinion of our Directors, are material to our business:

No. 1. 2. 3.	Trademark	Place of Registration PRC PRC HK	Class 19, 20, 21 19, 20, 21 19, 20, 21	Application Number 16046464 16046252 303262437	Application Date
					December 29, 2014 December 29, 2014 January 9, 2015

(b) Domain name

As of the Latest Practicable Date, we have registered the following domain name, which, in the opinion of our Directors, is material to our business:

No. 1.	Domain name www.flatgroup.com.cn	Registration Date March 31, 2009	Expiration Date
			March 31, 2017

(c) Patents

As of the Latest Practicable Date, we are the registered owner of the following patents which, in the opinion of our Directors, are material to our business:

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APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION
No. 1. 2. 3. 4. 5. 6. 7. 8. 9.	Patent Ultraviolet-blocking & ultra-clear patterned solar glass and its method of production (阻斷紫外線太陽能超白壓花玻璃及其製造方法) Melting furnace for ultra-clear patterned solar glass (一種太陽能超白壓花玻璃的熔窯) A kind of inspection system for ultra-clear patterned solar glass (一種太陽能超白壓花玻璃的檢測系統) A kind of afterheat recycling, desulfurization and dust removal device for glass melting furnace (一種玻璃熔窯的餘熱回收和脫硫除塵裝置) A kind of roller shaft cooling installation applied in the production of solar ultra-clear patterned glass (一種太陽能超白壓花玻璃製造過程中活動滾台軸冷卻機構) A combustion-supporting device by recycling hot air through after heat (採用餘熱回收熱空氣助燃的裝置) Installation structure of furnace lip brick and rolling device applied in the production of ultra-clear patterned solar glass (太陽能超白壓花玻璃生產中壓延機和熔窯唇磚的安裝結構) A cutting installation for solar ultra-clear patterned glass (一種太陽能超白壓花玻璃的切割裝置) A melting furnace improving the rolling quality of ultraviolet- blocking & ultra-clear patterned solar glass (提高阻斷紫外線太陽能超白壓花玻璃壓延質量的熔窯)	Patent Number ZL200710042037.0 ZL200920068937.7 ZL200920068938.1 ZL200920068939.6 ZL200920069515.1 ZL200920069516.6 ZL200920069517.0 ZL200920069518.5 ZL201020032984.9	Place of Registration PRC PRC PRC PRC PRC PRC PRC PRC PRC	Expiration Date
				June 14, 2027 March 16, 2019 March 16, 2019 March 16, 2019 March 26, 2019 March 26, 2019 March 26, 2019 March 26, 2019 January 12, 2020

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APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION
No. 10. 11. 12. 13. 14. 15. 16. 17. 18.	Patent A flywheel transmission installation applied in the deep processing of ultra-clear patterned solar glass (太陽能超白壓花玻璃在深加工過程中的飛輪輸送機構) A petroleum coke powder supported combustion system applied in the melting furnace of solar ultra-clear patterned glass (在太陽能超白壓花玻璃熔窯中採用石油焦粉的燃燒系統) A dynamic spraying system of nanomaterials on the surface of ultra-clear patterned solar glass (在太陽能超白壓花玻璃表面進行動態噴塗納米材料的系統) Puller (拉馬) A dual function vehicle of storage and transportation (貯存搬運兩用車) A plate glass automatic shifting transmission installation (平板玻璃自動換向輸送裝置) A comprehensive utilization installation of the after heat in melting furnace on ultra-clear solar glass (利用太陽能超白玻璃熔窯的餘熱進行綜合利用的裝置) A transmission system applied in the immersion process of nanomaterial coatings on ultra-clear patterned solar glass (太陽能超白壓花玻璃表面納米材料浸敷工藝中的輸送系統) A roll coating system of nanomaterial coatings on ultra-clear patterned solar glass (對太陽能超白壓花玻璃表面進行納米材料滾塗的系統)	Patent Number ZL201020032985.3 ZL201020126052.0 ZL201020537896.4 ZL201020172290.5 ZL201020172277.X ZL201020172279.9 ZL201020553863.9 ZL201020292610.0 ZL201020298161.0	Place of Registration PRC PRC PRC PRC PRC PRC PRC PRC PRC	Expiration Date
				January 12, 2020 March 8, 2020 September 20, 2020 April 26, 2020 April 26, 2020 April 26, 2020 October 8, 2020 August 15, 2020 August 19, 2020

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APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION	APPENDIX VII STATUTORY AND GENERAL INFORMATION
No. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.	Patent A fuel supply system for melting furnace of ultra-clear patterned solar glass (一種太陽能超白壓花玻璃熔窯的燃料配送系統) Cable discoid defense device (盤狀線纜放線裝置) Hollow glass aluminum spacer bending device (中空玻璃鋁間隔條彎曲裝置) An on-line coating system of ultra-clear patterned solar glass (一種太陽能超白壓花玻璃在線鍍膜系統) A system of inserting substrates into sub-atmospheric space applied in the vacuum coating process of Low-E glass (Low-E 玻璃的真空鍍膜操作中將基片輸入負壓室的系統) Wind-tight tempered glass quench devise (鋼化玻璃急冷導風防泄裝置) Coated glass color uniformity detecting device (鍍膜玻璃色差均勻度檢測裝置) Film cutting device (割膜器) Washer fan filter unit (清洗機風機過濾網裝置) Edger automatic loading inspection station (磨邊機自動上片檢測台) Steel strapping car (鋼帶打包車) Web hand cutting device (捲筒紙手搖裁切裝置)	Patent Number ZL201020637445.8 ZL201120153042.0 ZL201120153009.8 ZL201120187786.4 ZL201120187779.4 ZL201120537144.2 ZL201120537129.8 ZL201120537147.6 ZL201120537150.8 ZL201120537149.5 ZL201120537145.7 ZL201120537148.0	Place of Registration PRC PRC PRC PRC PRC PRC PRC PRC PRC PRC PRC PRC	Expiration Date
				December 1, 2020 May 14, 2021 May 14, 2021 June 6, 2021 June 6, 2021 December 20, 2021 December 20, 2021 December 20, 2021 December 20, 2021 December 20, 2021 December 20, 2021 December 20, 2021

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

No. 31. 32. 33. 34. 35. 36.	Patent Assisted detection devise of patterned solar glass (太陽能壓花玻璃輔助檢測裝置) A roll forming die for the solar concentrator glass (太陽能聚光玻璃滾壓成形模) A reflection-reducing and high transmission rate ultra-clear patterned PV Glass and its production method (一種減反射高透過率鍍膜太陽能超白壓花玻璃及其製造方法) Glass edger grinding device (玻璃磨邊機磨頭裝置) Glass coaters exhaust device (玻璃鍍膜機排氣裝置) A high transmission temperable double silvers Low-E Glass (高透型可鋼化雙銀Low-E玻璃)	Patent Number ZL201120537143.8 ZL201220360048.X ZL201010201967.8 ZL201520072522.2 ZL201520072759.0 ZL201520305843.2	Place of Registration PRC PRC PRC PRC PRC PRC	Expiration Date
				December 20, 2021 July 23, 2022 June 1, 2030 February 1, 2025 February 1, 2025 May 11, 2025

4. FURTHER INFORMATION ABOUT THE DIRECTORS AND SUPERVISORS

A. Particulars of Directors’ and Supervisors’ service contracts

Pursuant to Rules 19A.54 and 19A.55 of the Listing Rules, each of our Directors and Supervisors has entered into a service contract with us on October 16, 2015. Each service contract is for a term of three years commencing from the Listing Date.

Save as disclosed above, none of our Directors and Supervisors has or is proposed to have a service contract with our Company or any member of our Group (other than contracts expiring or determinable by any member of the Group within one year without payment of compensation other than statutory compensation).

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

B. Directors’ and Supervisors’ remuneration

(a) Directors

The aggregate remuneration paid and benefits in kind granted to the Directors for the three years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015 were approximately RMB2.20 million, RMB2.50 million, RMB2.09 million and RMB0.84 million, respectively. There has been no arrangement under which a Director has waived or agreed to waive any emoluments for the years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015.

Save as disclosed in this document, no other emoluments have been paid or are payable, in respect of the three years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015 by us to the Directors.

Under the existing arrangements currently in force, the aggregate remuneration payable and benefits in kind granted to the Directors for the year ending December 31, 2015 is estimated to be approximately RMB2.14 million.

Each of the Directors is entitled to reimbursement for all reasonable expenses properly incurred in the performance of his or her duties.

(b) Supervisors

The aggregate remuneration paid and benefits in kind granted to the Supervisors for the three years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015 were approximately RMB0.45 million, RMB0.49 million, RMB0.49 million and RMB0.40 million, respectively. There has been no arrangement under which a Supervisor has waived or agreed to waive any emoluments for the three years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015.

Under the existing arrangements currently in force, the remuneration payable and benefits in kind granted to the Supervisors for the year ending December 31, 2015 is estimated to be approximately RMB1.09 million.

Each of the Supervisors is entitled to reimbursement for all reasonable expenses properly incurred in the performance of his or her duties.

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

5. DISCLOSURE OF INTERESTS

A. Interests or short positions discloseable under Divisions 2 and 3 of Part XV of the SFO

Shareholder Mr. Ruan Hongliang (阮洪良)(3) . . . . . . Ms. Jiang Jinhua (姜瑾華)(4) . . . . . . Ms. Ruan Zeyun (阮澤雲)(5) . . . . . . Mr. Zhao Xiaofei (趙曉非)(6) . . . . . .	Number of Shares held after the [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]	Class Domestic Shares Domestic Shares Domestic Shares Domestic Shares	Nature of interest Beneficial owner and parties acting in concert Beneficial owner and parties acting in concert Beneficial owner and interest of spouse Beneficial owner and interest of spouse	Approximate percentage of shareholding in the relevant class of Shares after the REDACTED [REDACTED] [REDACTED] [REDACTED] [REDACTED]	Approximate percentage of shareholding in the total share capital of our Company after the REDACTED
					[REDACTED] [REDACTED] [REDACTED] [REDACTED]

Note:

(1) The calculation is based on the total number of [REDACTED] Domestic Shares in issue immediately after completion of the [REDACTED] (without taking into account the exercise of the [REDACTED]).

(2) The calculation is based on the total number of [REDACTED] Domestic Shares and the total number of [REDACTED] H Shares (i.e. a total of [REDACTED] Shares) in issue immediately after completion of the [REDACTED] (without taking into account the exercise of the [REDACTED]).

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

(3) Mr. Ruan Hongliang is the spouse of Ms. Jiang Jinhua. Mr. Ruan Hongliang owns [REDACTED] Domestic Shares. In addition, pursuant to a concert party agreement dated June 12, 2015 entered into between Mr. Ruan Hongliang and Ms. Jiang Jinhua, Mr. Ruan Hongliang is deemed to be interested in the [REDACTED] Domestic Shares owned by Ms. Jiang Jinhua under the SFO.
(4) Ms. Jiang Jinhua is the spouse of Mr. Ruan Hongliang. Ms. Jiang Jinhua owns [REDACTED] Domestic Shares. In addition, pursuant to a concert party agreement dated June 12, 2015 entered into between Mr. Ruan Hongliang and Ms. Jiang Jinhua, Ms. Jiang Jinhua is deemed to be interested in the [REDACTED] Domestic Shares owned by Mr. Ruan Hongliang under the SFO.
(5) Ms. Ruan Zeyun is the daughter of Mr. Ruan Hongliang and Ms. Jiang Jinhua and the spouse of Mr. Zhao Xiaofei. Ms. Ruan Zeyun owns [REDACTED] Domestic Shares and is deemed to be interested in the [REDACTED] Domestic Shares owned by Mr. Zhao Xiaofei under the SFO.
(6) Mr. Zhao Xiaofei is the spouse of Ms. Ruan Zeyun. Mr. Zhao Xiaofei directly owns [REDACTED] Domestic Shares and is deemed to be interested in the [REDACTED] Domestic Shares owned by Ms. Ruan Zeyun under the SFO.

B. Interests and short positions of the Directors and chief executive in the shares, underlying shares or debentures of our Company or associated corporations

Immediately following completion of the [REDACTED] and taking no account of any H Shares which may be allotted and issued pursuant to the exercise of the [REDACTED], each of the following persons will have an interest or short position in the shares, underlying shares or debentures of our Company or any of our associated corporations (within the meaning of Part XV of the SFO) which will have to be notified to us and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO), or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which will be required to be notified to us and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, in each case once the H Shares are listed on the Stock Exchange:

Interests in our Company

					Approximate
				Approximate	percentage of
				percentage of	shareholding in
				shareholding in	the total share
	Number of			the relevant	capital of our
	Shares held			class of Shares	Company after
	after the		Nature of	after the	the
Shareholder	[REDACTED]	Class	interest	REDACTED	REDACTED

Directors

Mr. Ruan Hongliang [REDACTED] Domestic Beneficial [REDACTED] [REDACTED] (阮洪良)[(3)] . . . . . . Shares owner and parties acting in concert Ms. Jiang Jinhua [REDACTED] Domestic Beneficial [REDACTED] [REDACTED] (姜瑾華)[(4)] . . . . . . Shares owner and parties acting in concert

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APPENDIX VII

STATUTORY AND GENERAL INFORMATION

Shareholder Mr. Wei Yezhong (魏葉忠) . . . . . . . Mr. Shen Qifu (沈其甫) . . . . . . . Supervisors Mr. Zheng Wenrong (鄭文榮先生) . . . . Mr. Shen Fuquan (沈福泉先生) . . . . Mr. Zhu Quanming (祝全明先生) . . . .	Number of Shares held after the [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]	Class Domestic Shares Domestic Shares Domestic Shares Domestic Shares Domestic Shares	Nature of interest Beneficial owner Beneficial owner Beneficial owner Beneficial owner Beneficial owner	Approximate percentage of shareholding in the relevant class of Shares after the REDACTED [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]	Approximate percentage of shareholding in the total share capital of our Company after the REDACTED
					[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Note:

(1) The calculation is based on the total number of [REDACTED] Domestic Shares in issue immediately after completion of the [REDACTED] (without taking into account the exercise of the [REDACTED]).
(2) The calculation is based on the total number of [REDACTED] Domestic Shares and the total number of [REDACTED] H Shares (i.e. a total of [REDACTED] Shares) in issue immediately after completion of the [REDACTED] (without taking into account the exercise of the [REDACTED]).
(3) Mr. Ruan Hongliang is the spouse of Ms. Jiang Jinhua. Mr. Ruan Hongliang owns [REDACTED] Domestic Shares. In addition, pursuant to a concert party agreement dated June 12, 2015 entered into between Mr. Ruan Hongliang and Ms. Jiang Jinhua, Mr. Ruan Hongliang is deemed to be interested in the [REDACTED] Domestic Shares owned by Ms. Jiang Jinhua under the SFO.
(4) Ms. Jiang Jinhua is the spouse of Mr. Ruan Hongliang. Ms. Jiang Jinhua owns [REDACTED] Domestic Shares. In addition, pursuant to a concert party agreement dated June 12, 2015 entered into between Mr. Ruan Hongliang and Ms. Jiang Jinhua, Ms. Jiang Jinhua is deemed to be interested in the [REDACTED] Domestic Shares owned by Mr. Ruan Hongliang under the SFO.

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

C. Agency fees or commissions received

Within the two years preceding the date of this document, no commission has been paid or payable (except commissions to the Underwriters) for subscription, agreeing to subscribe, procuring subscription or agreeing to procure subscription of any Shares in our Company.

D. Disclaimers

Save as disclosed in this document:

(a) none of the Directors or Supervisors or any of the parties listed in paragraph headed “6. Other Information — E. Qualifications of experts” of this appendix is interested in the promotion of our Company, or has any direct or indirect interest in any assets which have been, within the two years immediately preceding the date of this document, acquired or disposed of by or leased to any member of our Group, or are proposed to be acquired or disposed of by or leased to any member of our Group;
(b) none of the Directors or Supervisors is materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to our business taken as a whole;
(c) save in connection with the Underwriting Agreements, none of the parties listed in paragraph head “6. Other Information — E. Qualifications of experts” of this appendix:
(i) is interested legally or beneficially in the shares of any member of our Group; or
(ii) has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of our Group;
(d) none of the Directors, Supervisors or their respective close associates, or any of the Shareholders (who to the knowledge of the Directors owns more than 5% of our issued share capital) had any interest in any of our five largest suppliers and our five largest customers during the Track Record Period;
(e) no amount, securities or benefit has been paid, allotted or given within the two years preceding the date of this document to the Promoters nor is any such amount, securities or benefit intended to be paid, allotted or given;
(f) none of the Directors or Supervisors is interested in any business which competes or is likely to compete, either directly or indirectly, with our business;
(g) none of the Directors or Supervisors has been paid in cash or shares or otherwise by any person in respect of the three years ended December 31, 2012, 2013 and 2014 and five months ended May 31, 2015, and as an inducement to join or upon joining the Company, or otherwise for services rendered by him in connection with the promotion or formation of our Company;

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

(h) none of the Directors or Supervisors is a director or employee of a company which is expected to have an interest or short position in the Shares or underlying Shares falling to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO once the H Shares are listed on the Stock Exchange; and
(i) none of the Directors, Supervisors or chief executives of our Company has for the purpose of Divisions 7 and 8 of Part XV of the SFO or the Listing Rules, nor is any of them taken to or deemed to have under Divisions 7 and 8 Part XV of the SFO, any interests or short positions in the shares, underlying shares or debentures of the Company or any of our associated corporations (within the meaning of Part XV of the SFO) or any interests which will have to be entered in the register to be kept by the Company pursuant to section 352 of the SFO or which will be required to be notified to us and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies once the H Shares are listed on the Stock Exchange.

6. OTHER INFORMATION

A. Estate duty, tax and other indemnity

Our Controlling Shareholders have entered into the Deed of Indemnity with our Company (for itself and as the trustee for each of our subsidiaries) on October 16, 2015 (the “Deed of Indemnity”) to provide joint and several indemnities in respect of, among other matters, certain liabilities for Hong Kong estate duty which might be incurred by any member of our Group by reason of certain transfers of property (by virtue of section 35 and/or section 43 of the Estate Duty Ordinance, Chapter 111 of the Laws of Hong Kong) to any member of our Group on or before the Listing Date.

Pursuant to the Deed of Indemnity, our Controlling Shareholders have also given joint and several indemnities to our Company for ourselves and as trustee for our subsidiaries in connection with, among other things, any taxation which might be payable by any member of our Group resulting from or by reference to any income, profits or gains earned, accrued or received (or deemed to be so earned or accrued or received) on or before the Listing Date or any event occurring or deemed to occur on or before such date whether alone or in conjunction with any other event whenever occurring.

Our Controlling Shareholders will, however, not be liable under the Deed of Indemnity for the aforementioned taxation claim or liability:

(a) to the extent that provision or allowance has been made for such taxation, taxation claim or liability in the consolidated audited accounts of our Company and its subsidiaries as set out in the accountants’ report set out in Appendix I to this document or for the three years ended December 31, 2012, 2013 and 2014 and the five months ended May 31, 2015 (the “Accounts”);
(b) to any liability or taxation claim falling on any of the members of our Group in respect of their current accounting periods or any accounting period commencing on or after May 31, 2015 unless such liability or taxation claim would not have arisen but for any act or

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

omission of, or transaction voluntarily effected by, any of the members of our Group (whether alone or in conjunction with some other act omission or transaction whenever occurring) without the prior written consent or agreement of the Controlling Shareholders other than any such act, omission or transaction:

(1) carried out or effected in the ordinary course of business or in the ordinary course of acquiring and disposing of capital assets after May 31, 2015; or
(2) carried out, made or entered into pursuant to a legally binding commitment created on or before May 31, 2015; or
(3) consisting of any of the members of the Group ceasing, or being deemed to cease, to be a member of any group of companies or being associated with any other company for the purposes of any matter of taxation; or
(c) to the extent that any provision or reserve made for such taxation in the Accounts is finally established to be an over-provision or an excessive reserve provided that the amount of any such provision or reserve applied to reduce the Controlling Shareholders’ liability in respect of taxation claim or liability shall not be available in respect of any such liability arising thereafter.

The Controlling Shareholders have also undertaken to indemnify and at all times keep each member of our Group fully indemnified on demand and hold each of them harmless from and against any penalties or fines, damages, losses or liabilities arising from any anti-dumping and anti-subsidy investigations, any international sanctions on the Company’s sales to Russia, Belarus and Tunisia, any non-compliance incidents and any defects on properties, on or before the Listing Date, as set out in the sub-sections headed “Business — Regulatory Compliance and Legal Proceedings” and “Business — Properties” in this document.

B. Litigation

Save as disclosed in the paragraph headed “Regulatory Compliance and Legal Proceedings” in the section headed “Business” in this document, as of the Latest Practicable Date, we have not been involved in any litigation, arbitration or administrative proceedings of material importance, and no such other litigation, arbitration or administrative proceedings was known to the Directors to be pending or threatened against any member of our Group.

C. Sole Sponsor

The Sole Sponsor has declared its independence pursuant to Rule 3A.07 of the Listing Rules. Our Company has entered into an engagement agreement with the Sole Sponsor, pursuant to which our Company agreed to pay the Sole Sponsor a fee of RMB5 million to act as a sole sponsor to our Company in the [REDACTED].

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

The Sole Sponsor has made an application on our behalf to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the H Shares, including any [REDACTED] which may be issued pursuant to the exercise of the [REDACTED]. All necessary arrangements have been made enabling the H Shares to be admitted into CCASS.

D. Preliminary expenses

The estimated preliminary expenses in relation to the conversion of our Company from a limited liability company into a joint stock limited liability company were approximately RMB83,570 and were paid or payable by us.

E. Qualifications of experts

The qualifications of the experts, as defined under the Listing Rules, who have given opinions in this document, are as follows:

Name BOCI Asia Limited . . . . . . . . Jiangsu Yongheng Partners . . . LVN & Associates . . . . . . . . Deloitte Touche Tohmatsu . . . Frost & Sullivan . . . . . . . . . . Mining Associates Limited . . .	Qualification
	Licensed corporation under the SFO to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities as defined under the SFO PRC legal advisors Vietnam legal advisors Certified Public Accountants Independent industry consultant Independent technical consultant

F. No material adverse change

Save as disclosed in this document, the Directors have confirmed that there has been no material adverse change in our financial or trading position since May 31, 2015.

G. Binding effect

This document shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (WUMP) Ordinance as far as is applicable.

H. Consents

Each of BOCI Asia Limited, Jiangsu Yongheng Partners, LVN & Associates, Deloitte Touche Tohmastu, Frost & Sullivan and Mining Associates Limited has given and has not withdrawn its respective written consents to the issue of this document with the inclusion of any of its reports, letters, certificates or opinions and the references to its name included herein in the form and context in which they are respectively included.

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

I. Promoters

The Promoters of our Company are Mr. Ruan Hongliang (阮洪良先生), Ms. Jiang Jinhua (姜瑾華女士), Ms. Ruan Zeyun (阮澤雲女士), Mr. Zheng Wenrong (鄭文榮先生), Mr. Shen Fuquan (沈福泉先生), Mr. Zhu Quanming (祝全明先生), Mr. Wei Yezhong (魏葉忠先生), Mr. Shen Qifu (沈其甫先生), Ms. Tao Hongzhu (陶宏珠女士) and Mr. Wei Shutao (魏述濤先生).

Save as disclosed in this document, within the two years immediately preceding the date of this document, no cash, security or benefit has been paid, allotted or given, or is proposed to be paid, allotted or given to the Promoters named above in connection with the [REDACTED] or the related transactions described in this document.

J. Bilingual document

The English language and Chinese language versions of this document are being published separately, in reliance upon the exemption provided under section 4 of the [REDACTED].

K. Miscellaneous

(a) Save as disclosed in this document:
(i) within the two years immediately preceding the date of this document, no share or loan capital of any member of our Group has been issued or agreed to be issued fully or partly paid either for cash or for a consideration other than cash;
(ii) no share or loan capital of any member of our Group is under option or is agreed conditionally or unconditionally to be put under option;
(iii) no member of our Group has issued or agreed to issue any founder shares, management shares or deferred shares;
(iv) within the two years immediately preceding the date of this document, no commissions, discounts, brokerage or other special terms have been granted in connection with the issue or sale of any of the shares or loan capital of us or any of our subsidiaries;
(v) none of our equity or debt securities is currently listed or dealt in on any other stock exchange nor is any listing or permission to deal in such securities being or proposed to be sought;
(vi) there is no arrangement under which future dividends are waived or agreed to be waived;

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APPENDIX VII STATUTORY AND GENERAL INFORMATION

(vii) no member of our Group has issued or agreed to issue any debentures; and

(viii) there has been no interruption in our business which may have or have had a significant effect on the financial position in the last 12 months preceding the date of this document.
(b) We have no outstanding convertible debt securities or debentures; and
(c) We currently do not intend to apply for the status of a sino-foreign investment joint stock limited company and do not expect to be subject to the PRC Sino-foreign Joint Venture Law 《中華人民共和國中外合資經營企業法》( ).

L. Taxation of holders of H Shares

Hong Kong stamp duty will be payable by the purchaser on every purchase and by the seller on every sale, purchase and transfer of the H Shares. The duty is charged on each of the seller and purchaser at the current rate of HK$1.00 for every HK$1,000.00 of the consideration or, if higher, the fair value if the H Shares being sold or transferred.

— VII-27 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX VIII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to a copy of this document and delivered to the Registrar of Companies in Hong Kong for registration were, amongst other documents, copies of the [REDACTED], the written consents referred to under the paragraph headed “6. Other Information — H. Consents” in Appendix VII to this document and certified copies of the material contracts referred to in the paragraph headed “3. Further Information about the Business — A. Summary of material contracts” in Appendix VII to this document.

2. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of Orrick, Herrington & Sutcliffe at 43rd Floor, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong, during normal business hours from 9:00 a.m. up to 5:00 p.m. up to and including the date which is 14 days from the date of this document:

(a) our Articles of Association;
(b) the Accountants’ Report from Deloitte Touche Tohmatsu in respect of the historical financial information of our Group, the text of which is set out in Appendix I to this document;
(c) the audited financial statements of our Group for each of the three financial years ended December 31, 2012, 2013, 2014 and five months ended 31 May 2015;
(d) the assurance report on the unaudited pro forma financial information of our Group issued by Deloitte Touche Tohmatsu, the text of which is set out in Appendix II to this document;
(e) copies of the following PRC laws, together with unofficial English translations thereof:
(i) the PRC Company Law, the Mandatory Provisions and the Special Regulations;
(ii) the PRC Securities Law;
(iii) the PRC EIT Law; and
(iv) the PRC Mineral Resources Law;
(f) the PRC legal opinions prepared by our PRC Legal Advisors in respect of certain aspects of our Group and the property interests of our Group in the PRC and summary of PRC laws and regulations relating to our business;
(g) the Vietnam legal opinions prepared by LVN & Associates in respect of the legal requirements relating to our expansion in Vietnam;

— VIII-1 —

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX VIII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

(h) the Independent Technical Report;
(i) the Frost & Sullivan Report;
(j) the material contracts referred to in the paragraph headed “3. Further Information about the Business — A. Summary of material contracts” in Appendix VII to this document;
(k) the written consents referred to in the paragraph headed “6. Other Information — H. Consents” in Appendix VII to this document; and
(l) the service contracts referred to in the paragraph headed “4. Further Information about the Directors and Supervisors — A. Particulars of Directors’ and Supervisors’ service contracts” in Appendix VII to this document.

— VIII-2 —

AI assistant

Flat Glass Group Co., Ltd. — Capital/Financing Update 2015

51063_rns_2015-11-11_73843296-5709-4c2f-ac0f-b1ad762d27c2.pdf

Post Hearing Information Pack of

福萊特玻璃集團股份有限公司 FLAT GLASS GROUP CO., LTD.

(the “Company”)

WARNING

IMPORTANT

福萊特玻璃集團股份有限公司 Flat Glass Group Co., Ltd.

[REDACTED]

[REDACTED]

EXPECTED TIMETABLE[(1)]

EXPECTED TIMETABLE[(1)]

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

OVERVIEW

SUMMARY

OUR COMPETITIVE STRENGTHS

SUMMARY

OUR BUSINESS STRATEGIES

OUR BUSINESS MODEL

SUMMARY

OUR PRODUCTS

SUMMARY

OUR PRODUCTION FACILITIES AND PROCESSES

SUMMARY

SUMMARY

SUPPLIERS AND RAW MATERIALS PROCUREMENT

SUMMARY

OUR CUSTOMERS, SALES AND MARKETING

SUMMARY

RESEARCH AND DEVELOPMENT

MINING RIGHTS

SHAREHOLDER INFORMATION

SUMMARY

SUMMARY OF HISTORICAL FINANCIAL INFORMATION

Summary of Consolidated Statements of Profit or Loss and Other Comprehensive Income

SUMMARY

Summary of Consolidated Statements of Financial Position

SUMMARY

Summary of Consolidated Statements of Cash Flows

Financial Ratios

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

RECENT DEVELOPMENT

SUMMARY

SUMMARY

RISK FACTORS

INTERNATIONAL SANCTIONS ON OUR SALES TO RUSSIA, BELARUS AND TUNISIA

SUMMARY

SUMMARY

ANTI-DUMPING AND ANTI-SUBSIDY

USE OF PROCEEDS

SUMMARY

[REDACTED] STATISTICS

DIVIDEND POLICY

SUMMARY

NO MATERIAL ADVERSE CHANGE

LISTING EXPENSES

DEFINITIONS

[REDACTED]

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

DEFINITIONS

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

GLOSSARY OF TECHNICAL TERMS

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS

RISK FACTORS

RISKS RELATING TO OUR BUSINESS AND OUR INDUSTRY

RISK FACTORS

We face significant competition in the PV glass industry, which could materially and adversely affect our profitability.

We are subject to a wide variety of laws and regulations, any failure to comply with these laws or regulations or to control costs associated with their compliance could harm our business.

RISK FACTORS

Flat Glass Group Co., Ltd. Capital/Financing Update 2015